COVID-19 Forces Restaurant Industry in China to be Creative amid Low Foot Traffic
Dinning business is gradually recovering, but the recovery of passenger traffic is still slow.
The dining bar Jing A, located in Beijing ’s Qianliang Hutong, has been tossing around many times before finally starting dinning business on April 1. Its other branch, Sanlitun, Beijing, opened dine-in business in early February.
Since the end of March, especially after the opening of Wuhan on April 8, the catering industry has gradually entered the dine-in business period. According to data from the Meituan Research Institute, as of April 5th, the resumption rate of catering merchants nationwide has reached 85.4%. Chu Xueyou, vice president of Xibei, told CIC.com, as of April 7, except for 10 stores in Wuhan, all 376 stores in the country are open.
But dine-in business does not mean that passenger traffic is recovering.
On the one hand, the consumption habits affected by the epidemic have not been restored. The safety of going out and food safety are still the primary concerns of consumers today. The time for “retaliatory consumption” has not yet arrived. Moreover, strict anti-epidemic measures have not been relaxed. For example, before entering the Beijing A store of Qianliang Hutong, three temperature tests and information registration are required: Hutong community management, wework area management where Beijing A is located, and the store.
In addition, some areas require stores to limit the number of dine-in restaurants. For example, Beijing requires no more than 3 people to eat at the same table. Some need to sit at a table. The speed of passenger traffic recovery will be relatively slow. Meituan Research Institute data shows that the consumption recovery rate as of the end of March was less than 40%. Chu Xueyou, general manager of Beijing Xibei Catering Management Co., Ltd., also said that Xibei ’s passenger traffic only returned to 54% last year on April 7.
For the catering industry, the epidemic is not over, the industry is still in a challenging period. This is actually a change for many catering merchants. The previous survey data of Meituan Institute for catering merchants showed that 77.2% of catering merchants at the beginning of March did not operate normally, but most of the catering merchants did not give up online take-out business. For the catering industry, whether it is merchants or supply chain management companies, this outbreak has pressed their own accelerator keys for digital reform.
Dining Status: Dine-in food is gradually recovering and prices are rising, but the passenger flow is still not optimistic
The catering market is one of the areas most affected by the epidemic. “Approximately 1 / 6–1 / 7 of a year’s income for catering companies was earned in the ten or so days of the Spring Festival.” Chu Xueyou said. But this year is completely different. According to data from the National Bureau of Statistics, from January to February, the national catering revenue was 419.4 billion yuan, a year-on-year decrease of 43.1%, and the growth rate decreased by 52.8 percentage points from the same period of the previous year, showing a cliff-like decline.
As the country entered the “post-epidemic” prevention and control period, the catering industry gradually entered a state of recovery. Meituan reviews data show that as of April 5, the resumption rate of catering merchants nationwide has reached 85.4%. According to data provided by Tencent, in Wuhan alone, the number of offline transactions on WeChat Pay increased by 162% from March 25 to April 3 compared with the same period last month. A non-chain food stall located in Beijing’s East Third Ring Road also told vote.com that they will start dinning business in mid-April.
At the same time, in order to stimulate consumption, more than 30 cities such as Shenzhen and Hangzhou issued consumer vouchers, and the amount issued as of April 8 exceeded 5.6 billion yuan. The China-Thailand Securities Research Institute estimates that consumption coupons can increase consumption by more than 8%. Multiple signals indicate that the offline consumption trend is improving, but for the catering industry, offline consumption has not yet reached the 100% recovery stage.
Chu Xueyou said that the entire commercial service industry and the need for people to go to on-site services may also depend on the final conclusion of epidemic prevention and control. “Everyone still has uncertainty about the epidemic. They haven’t taken off their masks as before, and the whole family has dinner together.” According to data surveyed by the Meituan Institute, as of the end of March, the consumption recovery rate of catering merchants nationwide was not To 40%.
“We will feel that if the middle school and elementary school can resume classes, the epidemic situation may be truly controlled.” Chu Xueyou said that when that time comes, consumers can dare to boldly go to the streets to consume, and think that it may be It will be an indicator of the overall recovery of consumption.
And now, the catering to restore dine-in food is still in a dilemma.
Some restaurant chains have been exposed to price increases, and consumers are also dissatisfied. According to multiple media reports, while Haidilao, Xicha and other online celebrity catering brands resume business, prices have also risen. Haidilao publicly stated that due to rising costs, the company’s overall food price adjustment is controlled at 6%. “It’s not interesting.” Many netizens expressed their dissatisfaction with the price increase on Weibo. After all kinds of public opinion fermented, Haidilao apologized for this on April 10, and said that it would restore the price to the standard before the store closed on January 26, 2020.
Some netizens think that the price increase is reasonable, after all, too much was lost during the epidemic. It turned out that the revenue during the Spring Festival accounted for a large proportion of the catering industry throughout the year, but from the end of January to the present, it is still a challenge to the catering industry in its current state. “Equal to the first half of the business is gone. Coupled with the problem of tight cash flow, no catering company will keep 5–6 months of cash flow on the account, unless it is a relatively small company, it will be flat by the end of the year. It is already very good. “Chu Xueyou said.
Wang Hongtao, executive deputy secretary-general of China Chain Store & Franchise Association, also told vote.com, “The price increase of Haidilao is still within a reasonable price increase range, which is also a normal business practice.” He further stated that the store opened offline and opened There will be other costs corresponding to the door, “Cost of personnel, water and electricity, etc., but the flow of people is relatively small, and the sales volume is relatively low.” Many people in the industry said that price increase is a current option, because no matter Costs-labor costs, rent, raw materials-are all rising.
Therefore, in this case, after a comprehensive judgment, some stores will take short-term closures, or they may choose to partially increase their prices. In fact, due to rising pork prices, the restaurant brand chains have made a price adjustment last year. Taking Haidilao as an example, it has already increased prices for stores with a high turnover rate by 2% -5% in the winter of 2019.
The epidemic has accelerated the digitization of catering
Takeaway is still the most emphasized supplement at this stage.
“Because dine-in food has not fully recovered, so even if food delivery has partially increased, the entire fast food industry has not recovered so fast. Our suggestion for this industry also requires vigorously expanding the development of food delivery in stores.” , Some good brands have begun to try to get a good growth through the takeout of small programs, the same is true of other retail categories.
WeChat Pay and China Chain Store & Franchise Association released the “Digital Retail Express 2020 Smart Recovery Newsletter” showing that during the epidemic, the daily average of community small group programs increased by 656%, and the number of daily transactions of fresh fruit and vegetable small programs increased by 282 %, The daily user growth has remained above 200%.
Chu Xueyou told the vote.net that during the epidemic, Sibei quickly made adjustments and developed a “home kung fu dish”, adding a dozen more menus that can be sold online. “The online mall can see that the increment is very large. After taking out a series of measures, the increment has increased by about 20% compared with the same period of last year, and the increment of the selection mall is 300%. This number is still continuing to advance. among.”
Song Yingchun, founder of TODAY convenience store, also said that more than 95% of the performance during the epidemic came from online. “The accumulation of our convenience stores in the past few decades has been the operational capabilities of offline stores. How to operate online capabilities in the future is a must.” Song Yingchun said.
“This epidemic has brought a very important change to the industry.” Wang Hongtao, executive deputy secretary-general of China Chain Store & Franchise Association, told vote.com that before the epidemic, the digitization of the catering industry was only at the initial stage. It has also begun to develop in a comprehensive and in-depth manner.
In the past, the digitalization of the catering industry was mainly based on the operational level, such as the payment terminal or the ordering system at the store. In this epidemic, it also highlights that the offline digital process is far inferior to the original online business. Companies such as Meituan, Duodian, Meicai, etc., which are good at integrating offline and online businesses, “enjoyed” a large increase in passenger traffic during the epidemic.
Liu Guihai, a multi-point partner, told CIC that during the Spring Festival in 2020, GMV (total turnover) increased by 232.2% year-on-year, with a total transaction value of more than 4.2 billion yuan, an increase of 162.2% from December last year. The number of newly registered users also increased significantly, up 236.3% from last year ’s Spring Festival.
The transaction amount of American cuisine is also substantial, and during the epidemic period, the business has increased from the original to the catering merchants (to B), and added a number of urban households to buy vegetables to home (to C) business. Liu Jun, the chief human resources officer of Meicao, told the vote. Although the scale of the current business transaction has not returned to its peak, as long as the epidemic has passed, the catering will definitely resume. With such confidence, coupled with the existing talent resources and reserves of Meicai’s industry cannot meet its rapid development. At the moment when the recruitment market is generally shrinking, Meicai’s spring recruitment has expanded to 13,000 this year.
“During the epidemic, our business in more than fifty cities across the country has not been closed. Since the resumption of work on February 3, many restaurants may not have opened, but our employees have returned to various locations to prepare accordingly. Contact the restaurant owner by phone and pay attention to their development at any time. Once they come back, we may provide services. “Liu Jun, the chief human resources officer of Meicai, told CIC.com.
Despite being at different ends of the industry chain, companies all have the same goal: better operations and increased revenue. Wang Hongtao believes that after the epidemic, the digitalization of catering will gradually extend to the middle stage and the backstage, including the management side and the supply chain, in order to improve the overall efficiency of procurement, personnel management and business services. Liu Guihai told the China Investment Network that the digital transformation of traditional retailing is inseparable from the support of traditional retailing. It is believed that (industry) will have more consensus on the integration of online and offline integration.
Now, even the heads of many stores in Xibei are familiar with how to operate “private domain traffic.” During the epidemic, they increased the spread of the entire online through the WeChat group, and transformed those who may have to go to the store through online takeout to become a takeaway customer group.
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