In the period from January to April this year, dining consumption in Beijing, Shanghai, Guangzhou, Shenzhen, and other four first-tier cities has declined, and the low-price competition in the catering industry has intensified.
According to data released by the local statistics bureaus, from January to April, the total retail sales of social consumer goods in Beijing reached 464.91 billion yuan, a decrease of 0.2% year-on-year. The revenue from catering was 42.22 billion yuan, down by 2.3%, with dining income in Beijing dropping by 8.9% in April to 10.419 billion yuan.
In the first quarter of this year, Beijing’s catering revenue was 31.8 billion yuan, a 0.1% year-on-year increase. However, the data for dining in Beijing saw a significant decline entering the month of April.
Shanghai’s consumption data for the first four months of this year is similar to Beijing’s, with the total retail sales of social consumer goods at 606.133 billion yuan, down by 1.3% compared to the same period last year. In terms of industry breakdown, the retail sales of accommodation and catering industry in Shanghai were 49.026 billion yuan, a decrease of 2.5%, with the decline in accommodation and dining exceeding that of wholesale and retail.
In the other two first-tier cities, Guangzhou saw a dining revenue growth rate of 4.9%, while Shenzhen had a growth rate of 0.7%, both lower than the national average growth rate of 9.3%.
An Da, founder of Beijing Whale Rising Smart Catering Equipment Co., Ltd., revealed to “21st Century Business Herald” that he has had a lot of contact with restaurant owners in the Beijing-Tianjin-Hebei region, including franchisees and novice entrepreneurs in the catering industry. In the first five months of 2024, he acquired equipment from many high-end restaurants located outside the Third Ring Road in Beijing with an average customer price of over 500 yuan. Consumers are becoming increasingly rational and seeking better value for money.
An Da stated, “It is a consensus in the industry that running a restaurant in big cities is becoming increasingly difficult.” He mentioned that starting from the second half of 2023, the heat in the Beijing dining industry drastically cooled down, leading many restaurant owners to sell their equipment to him after facing losses.
Faced with market saturation, the catering industry is resorting to price wars to attract customers.
In Beijing’s bustling Chaoyang district, known for its diverse dining scene, in 2024, more mid-to-high-end restaurants have joined the discounted group purchases market. Hotels like Bulgari and Four Seasons have introduced group meal packages, with some high-end Western restaurants offering 198 yuan for two people. Additionally, promotions like 45 yuan for a business set meal and 9.9 yuan for a glass of cocktail are seen in bars on Meituan platform.
Online group purchasing deals at Joy City in Chaoyang District, Beijing, show almost all restaurants in the mall offering discounted packages, including fast-food chains like Roman Hotpot and Liao’s Chicken, providing single-person meals for 19.9 yuan. Some Japanese restaurants offer discounts as low as 20-30% off.
Data from catering brand financial reports show that in the first quarter of 2024, KFC’s average customer price was 42 yuan, Pizza Hut’s was 90 yuan, both in a downward trend. Additionally, in 2023, Haidilao’s average customer price dropped to 99.1 yuan, Hai Di Lao’s from 67.9 yuan to 63.4 yuan in first-tier cities, and Rui Xiang and Cuddy launched a 9.9 yuan coffee option.
At the beginning of 2023, a bar owner in Dongcheng District, Beijing, Meng Chen, mentioned that their bar did not participate in online group purchases due to differences in customer demographics. However, in 2024, Meng Chen’s establishment introduced a 99 yuan package for two.
Red Restaurant Network columnist Zhai Bin stated: “Major dining brands in Beijing are engaged in fierce price wars, with everyone operating in the red.”
From the consumer’s perspective, there is an increasing demand for value for money, with 9.9 yuan coffee, milk tea, and breakfast sets gaining popularity. The competition in terms of pricing and foot traffic is becoming fiercer in mid-to-high-end restaurants.
The intensifying market competition is leading to a faster pace of industry reshuffling. Chen Zhi Big Data shows that the scale of dining outlets in tier 1 and tier 2 cities experienced significant negative growth in 2023, with the number of dining outlets in tier 1 cities reaching 703,000, down by 7.4% year-on-year.
Data from Qichacha shows that from January to May this year, the number of new registered catering companies in the four major first-tier cities was 53,000, down by 5.8% year-on-year, while the number of deregistered companies was 31,000, up by 3.7%. This indicates fewer new entrants in the catering industry but more closures.
Regarding the saturation of consumption in first-tier cities, Zhai Bin, a columnist for the Red Restaurant Network, stated in an analysis for the network that in cities like Beijing and Shanghai, the high cost of living and job pressure surpass those of other cities. In the context of declining consumption, non-essential expenses such as dining, entertainment, and travel are correspondingly decreasing. Moreover, the slowdown in dining income growth in first-tier cities is related to fierce market competition and the difficulty of starting a restaurant. It is easier to survive in third and fourth-tier cities due to lower costs – a small shop’s rent may be just tens of thousands for a year, while in Beijing, it could cost tens of thousands per month.
In response to this, netizen “liyebj6” stated, “Dining in Beijing and Shanghai is expensive, that’s the fundamental reason.”
“Zhi Miao Jing Q” commented, “The high cost of rent and labor makes dining prices high, making it unaffordable for family life outside.”