Page 310 - 2019 White Paper on the Business Environment in China
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9 White Paper on the Business Environment in China
2.12 Food Services
Background Domestic Chinese-style full-service restaurants
dominate the market, representing eight of the leading
Service quality, variety of choice and 10 national positions in terms of value sales in 2017.
race to innovate are three However, the highly competitive consumer foodservice
critical factors for consumers, while service speed, landscape in China has resulted in marginal value share
convenience and pricing are rated as less important. The for each leading player. China’s restaurant market is
development of chain operators slowed over the past five more vibrant than ever and is home to close to 8 million
years, however, due to difficulties making the operating foodservice points of sale and dozens of unique local
model work. The main chain-operation models used in cuisines. The industry’s growth is outstripping other
the industry are franchising and direct management of major markets and showing extraordinary resilience in a
one’s own restaurants. As cities continue to modernize, time of declining GDP growth.The country’s middle class,
smaller traditional points of sale diminish, presenting with annual household incomes of between US$9,000
restaurant chains with an opportunity to capture even and US$34,000, has grown explosively and now accounts
more growth. The full potential of restaurant chains is for 68 percent of all urban households. The increase in
far from being reached in China. disposable income has meant that consumers now eat
out more frequently. The arrival and rapid expansion of
Looking forward, restaurant chains are likely to international chains in the past few years has increased
continue gaining market share, leveraging brand the competitiveness of the market. Despite heightened
recognition, experience sharing, buying power and curiosity and receptiveness, getting a consumer to visit
extensive support networks. The strong performance of your restaurant still represents a significant challenge.
international chains, ranging from fast food restaurants Fortunately, the strong performance of international
such as Pizza Hut, to casual dining chains such as TGI chains proves that success is achievable for foreign
Friday’s, signals that success is achievable for foreign players. They just need to know to how to capture the
players. International chains should not be discouraged hearts of clients. The consumers are becoming more
by intense competition. sophisticated, which has led to the arrival of new
concepts. They actively seek out new restaurants and
Trends are receptive to new formats and concepts such as new
theme, healthy lifestyle menus and organic produce,
China’s food service industry has grown fast in the past as well as innovative fusion cuisine. Over 80 percent of
four decades and is expected to exceed 4 trillion yuan Chinese with a monthly household income of 20,000
(US$620 billion) in 2018, a report showed. The sector’s yuan (US$3,049) or above agree that they actively seek
revenue stood at only 5.5 billion yuan in 1978 when China out new restaurants and enjoy eating out at modern,
began its reform and opening-up, but rose to about 4 casual place. Eighty percent of the same group also has
trillion yuan in 2017, becoming the world’s second largest a high propensity to spend more for a nicer restaurant
catering market. Food services made up 10.8 percent to indulge or reward themselves. In addition, consumers
of China’s total sales of consumer goods in 2017 and like to dine out to celebrate special occasions.
contributed 11.3 percent to overall consumption growth. Restaurants need to be aware of and sensitive to these
The country had less than 120,000 restaurants 40 years differences in dining missions/occasions in order to
ago, compared with 8 million restaurants by the end of succeed. They are willing to pay three times more for a
2017. About 1.04 million people worked in the catering celebratory or special occasion than for casual day-to-
sector in 1978, and about 30 million people are now day dining, which offers opportunities for restaurants
employed (Xinhua. China’s Catering). to launch special menus with higher prices and capture
additional revenue (Chuang).
310
2.12 Food Services
Background Domestic Chinese-style full-service restaurants
dominate the market, representing eight of the leading
Service quality, variety of choice and 10 national positions in terms of value sales in 2017.
race to innovate are three However, the highly competitive consumer foodservice
critical factors for consumers, while service speed, landscape in China has resulted in marginal value share
convenience and pricing are rated as less important. The for each leading player. China’s restaurant market is
development of chain operators slowed over the past five more vibrant than ever and is home to close to 8 million
years, however, due to difficulties making the operating foodservice points of sale and dozens of unique local
model work. The main chain-operation models used in cuisines. The industry’s growth is outstripping other
the industry are franchising and direct management of major markets and showing extraordinary resilience in a
one’s own restaurants. As cities continue to modernize, time of declining GDP growth.The country’s middle class,
smaller traditional points of sale diminish, presenting with annual household incomes of between US$9,000
restaurant chains with an opportunity to capture even and US$34,000, has grown explosively and now accounts
more growth. The full potential of restaurant chains is for 68 percent of all urban households. The increase in
far from being reached in China. disposable income has meant that consumers now eat
out more frequently. The arrival and rapid expansion of
Looking forward, restaurant chains are likely to international chains in the past few years has increased
continue gaining market share, leveraging brand the competitiveness of the market. Despite heightened
recognition, experience sharing, buying power and curiosity and receptiveness, getting a consumer to visit
extensive support networks. The strong performance of your restaurant still represents a significant challenge.
international chains, ranging from fast food restaurants Fortunately, the strong performance of international
such as Pizza Hut, to casual dining chains such as TGI chains proves that success is achievable for foreign
Friday’s, signals that success is achievable for foreign players. They just need to know to how to capture the
players. International chains should not be discouraged hearts of clients. The consumers are becoming more
by intense competition. sophisticated, which has led to the arrival of new
concepts. They actively seek out new restaurants and
Trends are receptive to new formats and concepts such as new
theme, healthy lifestyle menus and organic produce,
China’s food service industry has grown fast in the past as well as innovative fusion cuisine. Over 80 percent of
four decades and is expected to exceed 4 trillion yuan Chinese with a monthly household income of 20,000
(US$620 billion) in 2018, a report showed. The sector’s yuan (US$3,049) or above agree that they actively seek
revenue stood at only 5.5 billion yuan in 1978 when China out new restaurants and enjoy eating out at modern,
began its reform and opening-up, but rose to about 4 casual place. Eighty percent of the same group also has
trillion yuan in 2017, becoming the world’s second largest a high propensity to spend more for a nicer restaurant
catering market. Food services made up 10.8 percent to indulge or reward themselves. In addition, consumers
of China’s total sales of consumer goods in 2017 and like to dine out to celebrate special occasions.
contributed 11.3 percent to overall consumption growth. Restaurants need to be aware of and sensitive to these
The country had less than 120,000 restaurants 40 years differences in dining missions/occasions in order to
ago, compared with 8 million restaurants by the end of succeed. They are willing to pay three times more for a
2017. About 1.04 million people worked in the catering celebratory or special occasion than for casual day-to-
sector in 1978, and about 30 million people are now day dining, which offers opportunities for restaurants
employed (Xinhua. China’s Catering). to launch special menus with higher prices and capture
additional revenue (Chuang).
310
