Page 312 - 2019 White Paper on the Business Environment in China
P. 312
9 White Paper on the Business Environment in China
Full Service from the Industry Development Department of China
Cuisine Association, or CCA, shows that consumers are
Full-service restaurants sales in China were estimated paying growing attention to food and service quality,
to reach around US$533.7 billion by 2018. From 2011 to and consumption has become more brand-oriented
2018, sales revenue in full-service restaurants in China than price-oriented. In terms of the reputation of specific
almost doubled from US$300 billion to US$534 billion— brands in China, Haidilao is perceived as the most
and is expected to increase at an annualized rate of 7.5 reputable, followed by Pizza Hut and Little Sheep. With
percent through 2023 (Statista, Sales Revenue) to roughly more than 5,000 restaurants in 1,100 cities in China, KFC
US$630 billion. Improvements in the legal framework for dominates the country’s fast food landscape. As of 2016,
franchising and intellectual property rights will stimulate KFC helds 11.6 percent share of the market in China,
growth for chain operations, and major players will according to Euromonitor, far ahead of McDonald’s 5.6
continue enlarging their networks of branch restaurants percent. McDonald’s only has around 2,500 restaurants
and franchises. Full-service restaurants have been (Jacobs). The food and beverage market is continuously
experiencing steady growth, with industry revenue expanding, with branding being the biggest trend,
increasing at an annualized rate of 9.0 percent in the boosting the development of the market. Driven by
five years through 2018. The industry’s proportion of the consumption upgrade and the rapidly evolving city
total catering subsector has been slightly decreasing in construction, a growing number of international brands,
recent years, due to the fast growth of its main external such as Starbucks and Japanese ramen restaurant
competitor, the fast-food industry in China. Competition Ippudo, are now eyeing the local market.
in this industry is high and the market is very fragmented;
the combined share of the top four companies – China Catering and Home Delivery
Quanjude (Group), Yum! Brands, Inc, Sichuan Haidilao
Catering Company Limited and Tao Heung Group – was Over 300 million customers ordered food online in
only 1.0 percent in 2018. Some firms that have built 2018, meaning that one in five Chinese relied on delivery
strong brand images over many years have begun to services. A majority of customers ordered through
operate on a national scale with the development of chain popular apps. The size of the Chinese online delivery
operations. The development of chain operators slowed market exceeded 297 billion yuan (US$46.5 billion) in
over the past five years, however, due to difficulties 2017 representing annual growth of over 65 percent
making the operating model work. The main chain- and was expected to exceed 360 billion yuan in 2018.
operation models used in the industry are franchising The convenience and time-saving nature of the services
and direct management of one’s own restaurants. Some is particularly popular with people 20 to 30 years old,
of the major players, such as China Quanjude Group, who placed 65 percent of the orders in 2017. Experts
have shifted more toward the development of direct say there still is quite a bit of room for the industry to
management (IBISWorld, Full-Service). grow. The online delivery sector is burgeoning, but the
integration rate of the total catering sector with the
Independent full-service restaurants dominated in internet remains low, especially compared with movie
value sales terms in 2017. They are mostly located either theaters, where 80 percent of transactions are done
in neighborhood or prime districts, offer a wide range of online. That means that the Chinese delivery industry
choices, range from mass to premium cuisines, and cater still has great potential waiting to be explored in the
to the large consumer base in China. North American coming years.
full-service restaurants, however, registered the highest
current value growth, in addition to rising demand Giant restaurant chains from home and abroad, like
from the growing population of expatriates in China. McDonalds and Quanjude, a traditional Peking duck
Foodmate Foodservice (Shanghai) Co Ltd accelerated chain brand, have seen their delivery business expand
its expansion in China, making chained North-American quickly. More than half of orders came from residential
full-service restaurants even more widely present and areas, followed by schools, office buildings and hotels.
enhancing product awareness among local consumers Online delivery hasn’t replaced dine-in. Instead, it
(Euromonitor, Full-Service). has met people’s growing need to eat meals at home
without cooking them. Expanding delivery services,
When it comes to eating out, the Chinese public is however, pose a challenge to some traditional industries
increasingly turning to branded chains. New research like instant noodles. Industry reports have continued to
312
Full Service from the Industry Development Department of China
Cuisine Association, or CCA, shows that consumers are
Full-service restaurants sales in China were estimated paying growing attention to food and service quality,
to reach around US$533.7 billion by 2018. From 2011 to and consumption has become more brand-oriented
2018, sales revenue in full-service restaurants in China than price-oriented. In terms of the reputation of specific
almost doubled from US$300 billion to US$534 billion— brands in China, Haidilao is perceived as the most
and is expected to increase at an annualized rate of 7.5 reputable, followed by Pizza Hut and Little Sheep. With
percent through 2023 (Statista, Sales Revenue) to roughly more than 5,000 restaurants in 1,100 cities in China, KFC
US$630 billion. Improvements in the legal framework for dominates the country’s fast food landscape. As of 2016,
franchising and intellectual property rights will stimulate KFC helds 11.6 percent share of the market in China,
growth for chain operations, and major players will according to Euromonitor, far ahead of McDonald’s 5.6
continue enlarging their networks of branch restaurants percent. McDonald’s only has around 2,500 restaurants
and franchises. Full-service restaurants have been (Jacobs). The food and beverage market is continuously
experiencing steady growth, with industry revenue expanding, with branding being the biggest trend,
increasing at an annualized rate of 9.0 percent in the boosting the development of the market. Driven by
five years through 2018. The industry’s proportion of the consumption upgrade and the rapidly evolving city
total catering subsector has been slightly decreasing in construction, a growing number of international brands,
recent years, due to the fast growth of its main external such as Starbucks and Japanese ramen restaurant
competitor, the fast-food industry in China. Competition Ippudo, are now eyeing the local market.
in this industry is high and the market is very fragmented;
the combined share of the top four companies – China Catering and Home Delivery
Quanjude (Group), Yum! Brands, Inc, Sichuan Haidilao
Catering Company Limited and Tao Heung Group – was Over 300 million customers ordered food online in
only 1.0 percent in 2018. Some firms that have built 2018, meaning that one in five Chinese relied on delivery
strong brand images over many years have begun to services. A majority of customers ordered through
operate on a national scale with the development of chain popular apps. The size of the Chinese online delivery
operations. The development of chain operators slowed market exceeded 297 billion yuan (US$46.5 billion) in
over the past five years, however, due to difficulties 2017 representing annual growth of over 65 percent
making the operating model work. The main chain- and was expected to exceed 360 billion yuan in 2018.
operation models used in the industry are franchising The convenience and time-saving nature of the services
and direct management of one’s own restaurants. Some is particularly popular with people 20 to 30 years old,
of the major players, such as China Quanjude Group, who placed 65 percent of the orders in 2017. Experts
have shifted more toward the development of direct say there still is quite a bit of room for the industry to
management (IBISWorld, Full-Service). grow. The online delivery sector is burgeoning, but the
integration rate of the total catering sector with the
Independent full-service restaurants dominated in internet remains low, especially compared with movie
value sales terms in 2017. They are mostly located either theaters, where 80 percent of transactions are done
in neighborhood or prime districts, offer a wide range of online. That means that the Chinese delivery industry
choices, range from mass to premium cuisines, and cater still has great potential waiting to be explored in the
to the large consumer base in China. North American coming years.
full-service restaurants, however, registered the highest
current value growth, in addition to rising demand Giant restaurant chains from home and abroad, like
from the growing population of expatriates in China. McDonalds and Quanjude, a traditional Peking duck
Foodmate Foodservice (Shanghai) Co Ltd accelerated chain brand, have seen their delivery business expand
its expansion in China, making chained North-American quickly. More than half of orders came from residential
full-service restaurants even more widely present and areas, followed by schools, office buildings and hotels.
enhancing product awareness among local consumers Online delivery hasn’t replaced dine-in. Instead, it
(Euromonitor, Full-Service). has met people’s growing need to eat meals at home
without cooking them. Expanding delivery services,
When it comes to eating out, the Chinese public is however, pose a challenge to some traditional industries
increasingly turning to branded chains. New research like instant noodles. Industry reports have continued to
312
