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Cook the Right Thing

Apr 20-2020   



 

Catering might not be a strategic industry in many people’s eyes, but food spending still rules the roost among all consumptions in China. In 2018, food amounted to 28-29% of China’s Engel Coefficient. The catering industry as a whole has an enormous size, but behemoth restaurant chains are sparse and scanty, said Prof. Zhou Qiren of the NSD in a recent speech for a gathering of entrepreneurs.

 

KFC and McDonald are the two leading catering brands in China, raking in 46 billion yuan and 24 billion yuan a year respectively. China had 9.6 million catering businesses in 2018, with 20-30 million employees and annual sales of 4.2 trillion yuan. Hai Di Lao, a hotpot chain, might have reached 20 billion yuan in annual revenue, but most Chinese restaurants still have a hard time scaling up due to the seemingly insurmountable challenge of standardizing Chinese cooking.

 

The pandemic has put a strangling hold on catering businesses. Prof. Zhou commended some companies in their all-out efforts to ensure cash flows by tapping government support and bank loans. Meanwhile, he said that companies should act fast to examine systemic capabilities and identify market demands. They are also advised to look beyond current uncertainties and fix strategic vision on five-to-ten-year horizon.

 

The pandemic has wreaked havoc on customer traffic, but the ‘stock’ – notably the demand and supply chain - remains largely unscathed. To overcome current quandary, restaurants should re-tool products and prices to make their combinations appealing to customers. Using Costco as an example, Prof. Zhou illustrated the importance of creating a virtuous circle in which throngs of customers are treated to low price and high quality and suppliers find it too attractive to stay away from the act.

 

Damaging as the pandemic has been, no well-known enterprises have yet succumbed. In contrast, the debacle of LuckIn Coffee has demonstrated that book-cooking is an even more malicious virus. Catering firms that eye a public listing are well advised to focus on cooking the right thing.

 

Cook the Right Thing

Apr 20-2020   



 

Catering might not be a strategic industry in many people’s eyes, but food spending still rules the roost among all consumptions in China. In 2018, food amounted to 28-29% of China’s Engel Coefficient. The catering industry as a whole has an enormous size, but behemoth restaurant chains are sparse and scanty, said Prof. Zhou Qiren of the NSD in a recent speech for a gathering of entrepreneurs.

 

KFC and McDonald are the two leading catering brands in China, raking in 46 billion yuan and 24 billion yuan a year respectively. China had 9.6 million catering businesses in 2018, with 20-30 million employees and annual sales of 4.2 trillion yuan. Hai Di Lao, a hotpot chain, might have reached 20 billion yuan in annual revenue, but most Chinese restaurants still have a hard time scaling up due to the seemingly insurmountable challenge of standardizing Chinese cooking.

 

The pandemic has put a strangling hold on catering businesses. Prof. Zhou commended some companies in their all-out efforts to ensure cash flows by tapping government support and bank loans. Meanwhile, he said that companies should act fast to examine systemic capabilities and identify market demands. They are also advised to look beyond current uncertainties and fix strategic vision on five-to-ten-year horizon.

 

The pandemic has wreaked havoc on customer traffic, but the ‘stock’ – notably the demand and supply chain - remains largely unscathed. To overcome current quandary, restaurants should re-tool products and prices to make their combinations appealing to customers. Using Costco as an example, Prof. Zhou illustrated the importance of creating a virtuous circle in which throngs of customers are treated to low price and high quality and suppliers find it too attractive to stay away from the act.

 

Damaging as the pandemic has been, no well-known enterprises have yet succumbed. In contrast, the debacle of LuckIn Coffee has demonstrated that book-cooking is an even more malicious virus. Catering firms that eye a public listing are well advised to focus on cooking the right thing.