China's Restaurant Industry

Facts and Trends of China’s Restaurant Industry

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China’s Restaurant Industry

The growth of the country’s restaurant sector in 2014 increased for the first time in the past four years. Revenue of China’s restaurant sector reached 2.79 trillion yuan (US$445.5 billion) in 2014, up 9.7% from 2013, according to the latest data released by China Cuisine Association (CCA). The growth in the restaurant sector has reached approximately 3 trillion yuan in 2015. The sales revenue of the country’s restaurant industry has seen a double-digit growth in these recent years, and a lot of international restaurant enterprises have played an important role in the sector.

Trend in the Restaurant Industry

China's Restaurant IndustryIn recent years, china’s restaurant industry has witnessed rapid development marketing services in the restaurant industry which plays an increasingly important role in the restaurant industry trends: taking the road of high quality and fast-food restaurant; having a greater emphasis on the marketing environment, the atmosphere; the ecological agriculture, caring about healthy eating, the environment is what will attract customers; Indeed, it is important to have adapted services; suitable to people’s emotional life, social activities. It will enhance the consumer’s demand for services and thus improve research and innovation in the domain. Modifying and changing the whole process of training and regular technology, the implementation of external and an internal combination of strong full services awareness and service skills training will rise the demand within the industry.

The driven power relies on strategic achievement in the restaurant industry. It intends to put all the available international market and marketing channel into use while allocating resources to expand the market share and the accessibility of China ‘s manufacturing industry and food processing. It helps to avoid trade barrier, expand foreign trade and create more value of the market. It’s expected that scale in restaurant industry will be overwhelming and transaction of take-over valued above billions which are not uncommon, particularly for foreign acquisition. When the change in food consuming structure, habits and power will boost industrial upgrading and profit model, indeed, acquisition stirs up individualized products, line of divisions, industrial chain and it will expand more leading companies. Restaurant services saw double-digit growth in China in the past decade, with total retail sales receipts reaching 2,344.8 billion RMB in 2013. Putting aside from the growing demand for business entertaining, more and more people are going to pubs, restaurants, teahouses and other eateries for everyday meals and gatherings with friends. This has encouraged the dynamic development of restaurant services. As the spending power of households of middle-income and above increases, the occasion of eating outside also rises. Chinese people now consider eating out as an important leisure activity on weekends or holidays. On the other hand, in the process of rapid urbanization, good restaurant services and restaurants with a unique and specific character is part of the major selling points of commercial districts and shopping centers in attracting consumers.

China’s Restaurant Industry: A Double-Digit Growth

Urbanization is developing space on the mainland. Big and small Chinese cities are drawing up new plans for their business districts in the center and are actively developing new commercial districts and development zones on the outskirts. Efforts are made to develop the consumer market in the modern retailing direction, that is, changing the old way of fragmented markets into a new retail system with shopping malls and modern department stores forming the mainstay. Operators from the restaurant service are also moving into a variety of retail hotspots with a brand-new design.

What highlight the attention is that leading commercial districts and shopping centers are all targeting restaurants of high quality and with distinctive characteristics.

The restaurant service industry has seen double-digit growth in the past few years, which roughly corresponded to the growth of the consumer market as a whole. In 2014, the total retail sales receipts of the restaurant industry amounted to 2,944.8 billion RMB up 15.6% from the previous year, accounting for 9.1% of total retail sales of consumer goods.

However, market competition is intense, many of the restaurants are operated as individually-owned businesses. There were 22,496 large restaurant businesses registered as legal persons in 2013, including chain-operated enterprises with many branches. The business of these restaurant service operators may develop rapidly in a short term if their services are accepted by the market. Otherwise, they may be turned away from by consumers and go out of the market in no time.

In spite of this, the overall turnover of large restaurant establishments almost doubled between 2010 and 2014. The market continued its rapid growth even though competition is intense. Taking income from their main business as base value by simple calculation, the after-tax profit margins of these legal persons were as high as 35% in 2013. Thus, even though the market is very competitive and poorly-managed operations will easily be forced out of business, and many newcomers still wish to have a go and hope to clinch a share of this fast-growing market.

During the past years, the number and turnover of chain-operated restaurant outlets continued to increase. Of this, 60% of the turnover came from fast-food operations, a sector which is however dominated by foreign investment.

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