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China's Chain Catering Industry Witnessing Slow Growth

Date:13-01-2014

China’s catering industry has faced many challenges in the last couple of years which has contributed to a declining growth rate. Although the demand in the market is very high, catering enterprises in China has not been able to capitalize on the demand. Factors such as slow growth of the economy, sky rocketing operation cost and frequent occurrence of food safety accidents are some challenges that the Chinese chain catering industry is facing. However, with rapid urbanization and change in people’s eating habits, the outlook of the chain catering industry in China is looking up. Although the market is huge, in China the catering industry has a relatively low market concentration.

Market Overview
In 2012, China’s catering industry had achieved revenue of 2.3448 trillion yuan which accounted for a year-on-year increase of 13.6%. In 2013, the catering industry in China witnessed a slow growth and from January to November the industry had sales revenue of 2.2923 trillion yuan with a year-on-year increase of 9.0%. Issues in food safety and operations management have affected the development and expansion of the catering industry in China.

According to China’s Cuisine Association, in 2012, the growth rate of top 100 restaurants in China reached 16.8 percent which represented a year-on-year decline of 11.52 percent. The slowdown in the industry is attributed to the central government’s austerity drive in the nation which opposes wasting public money and display of extravagance. Many small and medium-sized restaurants posted a negative growth in the last two years. A number of high-end catering enterprises in China witnessed a slowdown in their revenue and profit as officials were no longer allowed to have large extravagant public banquets. These public banquets contributed to a major portion of revenue in high-end restaurants.

To overcome the slump in the catering industry and to boost revenue, industry players are seeking to change its structure and operations. Restaurant operators are trying out new menus, presenting low-priced dishes and investing in group meal catering services to attract consumers. Some of the key players in China’s catering industry are Xiao Nan Guo Restaurants Holdings Limited, Beijing Quanjude Mayerton Restaurant Management Co. Ltd., Tang Palace (China) Holdings Limited, Beijing Xiangeqing Co. Ltd. and Xi'an Catering Co. Ltd. China’s catering industry needs to address the problems of lack of standardization and issues of food safety to grow in the future.

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