In the first half of 2024, the profits of Chinese catering enterprises have generally declined, with several companies such as Naixue Tea reporting losses in the hundreds of millions. Industry insiders indicate that the catering industry has entered an era of thin profits, signaling a time when making money becomes increasingly challenging.
Recently, Chinese listed catering companies have successively disclosed their performance in the first half of the year, with declining profits and frequent losses being highlighted in their reports.
Tea Bai Dao estimated a net profit decrease of up to 63.03% compared to the same period last year. Weiqian China shifted from profit to loss, expecting a loss of no more than 20 million yuan in the first half of the year. Naixue Tea incurred losses ranging from 420 million to 490 million yuan in the first half of the year. Xiabuxiabu forecasted first-half revenue of 2.4 billion yuan, a 15.9% decrease from the same period last year, with a net profit changing from 2.12 million yuan to a loss of 260-280 million yuan. Weiqian China estimated a first-half loss of no more than 20 million, a reduction of over 133 million yuan from the profit of the same period last year. Xi’an Catering recorded approximately 349 million yuan in first-half operating income, a 7.93% year-on-year decrease, with a net loss of 59.6463 million yuan, down by 29.53%.
Moreover, Tang Palace China, Taixing Group, Jiujiumaojiu, Tea Bai Dao, as well as Starbucks and Luckin Coffee have also experienced varying degrees of profit decline, with some catering enterprises reporting losses exceeding hundreds of million yuan.
Overall, catering enterprises in first-tier cities like Beijing, Shanghai, Guangzhou, and Shenzhen have been caught in negative growth or slow growth. From January to May, Shanghai’s accommodation and catering industry saw a 3.1% year-on-year decrease in retail sales, while Beijing experienced a 3.5% decline in catering industry revenue in the first half of the year. The retail sales growth rate for Guangzhou’s accommodation and catering industry was 3%, with Shenzhen recording just a 1.3% increase in catering revenue in the first half of the year, all lower than China’s overall catering growth rate of 7.9%.
In response to these challenges, catering giants attribute the decline in profits to weak consumer demand and price wars.
Pei Jie, a Chongqing hotpot successor, expressed to Hong Can Net, “This year, the consumer market is very weak, the entire market is not doing well, everyone’s spending frequency has decreased, and Pei Jie has also slowed down its pace. It’s better to open fewer stores and ensure a good survival rate – the first priority is to survive, then there is a chance to thrive.”
Meanwhile, the prevalence of “9.9 yuan” milk tea, coffee, and even fast food items has increased. In May, Xiabuxiabu announced price reductions, with most store set meals dropping to around 50 yuan, and new menu set meal prices decreasing by over 10%. Xiangcun Ji has also lowered prices multiple times, launching a promotional campaign in June claiming prices are “back to 2008 levels.”
Hong Can Net suggests that facing an increasingly saturated market, catering giants are collectively focused on maintaining survival rates and preserving cash flow as the current key objectives.
Wang Guoyu, Chairman of Beijing Nanchengxiang Catering Co., analyzes the current catering market situation, stating, “Prices are falling, profits are declining, the peak season is not booming, and the winter is becoming difficult. It’s a dangerous signal if you make money in the first half of the year but may end up empty-handed in the winter. Don’t assume that the days of making money are ahead, it may only get harder in the future, do not expect things to improve in a few years.”