As of June 30 this year, in the first six months of the year, the number of deregistered and revoked catering businesses in China reached 1.056 million, which is close to the total number of last year. Overall, the catering industry in China has experienced a situation of increased revenue but not increased profits.
According to data from Tianyancha, a mainland China enterprise and commercial inquiry platform, in the first six months of this year, the number of newly registered catering-related enterprises in China reached 1.346 million, while the number of deregistered and revoked businesses also reached 1.056 million, including 10,471 revocations and 1,045,678 deregistrations.
On July 2, the mainland China’s top catering media platform “Catering Boss Insider” reported that in the whole of 2023, the number of catering businesses revoked and suspended in China was 1.359 million, and in just six months of 2024, this figure has already “nearly equaled” the total of the previous year.
Gou Ge, who is engaged in the recycling of second-hand catering equipment, revealed to “Catering Boss Insider” that compared with the data on opening and closing stores, there are still more people opening new stores than closing them this year. However, compared to previous trends, the number of new store openings has decreased significantly.
Gou Ge also expressed, “Compared with the same period last year, catering revenue has generally declined, ranging from 15% to as high as 30% to 50%.”
According to data recently released by the National Bureau of Statistics of the Communist Party of China, from January to May, the catering revenue in China was 2.1634 trillion yuan. The catering revenue of above-quota units was 585.8 billion yuan, up by 8.4% year-on-year.
While the catering revenue appears to show growth on the surface, the China Cooking Association has analyzed that “at the same time, the catering industry has seen a phenomenon of increased revenue but not increased profits.” Price wars, homogeneous competition, and increasing cost pressures are the main factors contributing to this phenomenon.
Looking specifically at Beijing, a first-tier city, the catering industry achieved revenue of 53.07 billion yuan from January to May 2024, a 2.7% decrease year-on-year. The Shanghai Statistics Bureau announced the total retail sales of social consumer goods from January to May, including accommodation and catering industry with a retail amount of 60.934 billion yuan, down by 3.1%.
As early as April, Beijing and Shanghai had experienced a “double decline” in revenue from accommodation and catering. Even though half of the year has passed, the situation of “double decline” has not yet turned around.
Many industry insiders have said that many catering bosses have not sincerely smiled since the Chinese New Year in 2024.
Hu Zong invested 4.5 million in Yunnan cuisine in Beijing in 2022 and has not yet broken even. Hu Zong said that after the Chinese New Year in 2024, there were fewer people at his own restaurant. He mentioned, “Actually, many young people who returned to their hometowns last year have not come back. Moreover, the average consumption per table has decreased by 30%-40% as a norm. Previously, a table for 5-6 people typically spent 700-800 yuan (140-150 yuan per person), while now, it is common to see tables spending three to four hundred yuan. The situation of people leaving the table is more obvious, and there are even cases of two people ordering one dish. We have a classic dish called “Black Three Chops,” which is very satisfying and costs 42 yuan. If two people come, order “Black Three Chops” and two bowls of rice, it only costs 50 yuan. This is something that would never have happened last year.”
Faced with market saturation, catering enterprises have begun to lower prices to attract customers.
According to Caixin, the mainstream prices of Chinese catering chain brand “Huo Guo Lao” featuring noodles and “Fu Lao Mian” have decreased by about 30%, ranging between 16 yuan and 29 yuan.
Another chain Chinese restaurant brand “Jiu Mao Jiu” announced price cuts in May. Their group also launched a two-person 10% off set meal on group-buying platforms.
Hotpot chain restaurant Haidilao had an average customer price of 99.1 yuan in 2023, down by 5.8 yuan. Its sub-brand “Hai La Huo Guo” (now renamed Xiao Hai Huo Guo) was known as a budget version of Haidilao. After opening last year with an average price of around 80 yuan per person, they continued to lower prices, currently ranging between 50-60 yuan, even offering a 39.8 yuan weekday lunch set.
The average customer price at Xiabu Xiabu dropped by 1.7 yuan to 62.2 yuan in 2023. Their high-end hotpot brand “Couching” within the group had an average consumption of 142.3 yuan last year, down by 8.6 yuan.
An industry expert who has been in the mall dining business for many years told “Catering Boss Insider” that with the downward trend of consumption, the average prices of various categories of mall dining continue to decline. According to his observations, for formal dining in shopping centers, an average of 70-80 yuan per person was considered a good value for the past, but this year that range is no longer sustainable. “It’s awkward, you have to hit around 50-60 yuan. In the past, 100 yuan was common, but now it seems ‘too expensive’.”
He mentioned that in a market with limited existing stock, the main track of fast food still focuses on a range between 25-35 yuan, with 25 yuan being a crucial price point. However, fast food is becoming more formalized, while formal dining is becoming more like fast food. It is clear that fast food is slowly exerting “lethal power” on formal dining consumption.
He Guangqi, the founder of Xiabu Xiabu, said in an interview with “China Entrepreneur” magazine that the competition in the market for products around 50 yuan is becoming increasingly fierce. Suddenly, the consumption in the entire market is becoming more segmented, with one part being within the teens, twenties, to within fifty, then sixty, seventy, and one hundred yuan, which was not so segmented before.
In 2024, the price war in the catering industry continues. The China Cooking Association even called for the industry to “stop price wars.”
A Tencent user, 5iv7pf6, commented, “The income of ordinary people has generally decreased, while the middle and high-income groups constitute a small part. People’s desire to consume has decreased, the service industry tends to be saturated, and domestic industries are waiting to be eliminated.”
Netizen “『ˊｓ』苽.丶” said, “So many catering businesses have closed down, let alone other physical stores, the statistics that come out look too good to be true.”
“Seven-seven-tong–Mr. Cai” advised everyone, “In this environment, it’s better not to start a business. To survive, you have to hold onto what you have.”