Why is it getting more and more expensive?, Chinese fast food costs | manpower | fast food

"The villagers can't afford to eat their chickens anymore."

A joke circulating online reveals the awkwardness of current Chinese fast food: prices are getting higher and higher.

They all have very approachable and down-to-earth names, just like the initial temperament, the pricing of these Chinese fast foods was initially friendly, synonymous with "large quantity and affordable", and also the most kind and considerate choice for many people when they are worried about "what to eat".

But after wave after wave of price hikes swept through, these Chinese fast food restaurants became increasingly "exquisite", along with pricing and the perception of diners being refreshed.

A monthly salary of 20000 yuan, dare not order casually

The price increase of Chinese fast food is an undeniable fact.

The Chinese fast food restaurant, which has been remembered by the public as a place with flies flying everywhere and greasy table mats, has now entered a spacious and bright commercial center, creating a clean and fresh dining environment like a new leaf, and opening branches in the bustling areas of major cities like mushrooms after rain.

With a neat and uniform appearance and a ubiquitous layout, no matter where you are in the city, you can always find one or two "friendly faces" nearby by opening your phone.

Of course, this is understandable. A street side small restaurant that wants to make money and develop upwards, branding and chain building are a relatively stable path.

But when you order food, you will find that the cost of their beauty and increase seems to have to be taken out of your wallet.

Exchange a small amount of food for thirty or forty yuan, with only a few pieces of meat. Picking up chopsticks can be shocking——

Who betrayed me in my wallet and fast food restaurant?

A netizen counted the prices of several top Chinese fast food chains and found that if the standard of one meat, one vegetable, and one soup, one rice is followed, the average consumption of a meal in first tier cities is over 40 yuan.

On the other hand, according to surveys, the average budget for Chinese consumers to consume a Chinese fast food meal is generally below 20 yuan.

With such a gap, consumers are quite dissatisfied with the "high-profile" price increase of Chinese fast food restaurants.

Previously, a Chinese style chain store frequently made headlines due to price hikes. Due to a significant increase in the prices of all its dishes, it was questioned by netizens. The person in charge of the store apologized, but netizens did not accept it, and even mocked "retaliatory price increases look unsightly.".

The once affordable and cost-effective Chinese fast food seems to be experiencing a collective "exquisite leap", attempting to compete with the low-end past in terms of price, but consumers are more attracted to its simplicity and discounts.

Who should be blamed for the price increase?

Consumers feel that the expenses spent on meals are increasing, but the wallets of catering companies are not bulging.

According to industry surveys, many Chinese fast food brands have had an average net profit margin of less than 4% in recent years, and their gross profit margin has been declining year by year.

Chinese fast food is facing rising prices of raw materials, rising costs of rent and labor.

With the impact of multiple factors such as the pandemic and geopolitics, prices in the global food supply chain continue to rise, and domestic catering enterprises cannot remain isolated.

Not only Chinese fast food, but the rising costs have also put pressure on the entire catering industry.

That's why many drinks, snacks, and restaurants around me seem to have increased in price recently.

The environment of rising prices is a test of a company's ability to cope. Currently, many Chinese catering enterprises are accelerating their supply chain layout, including establishing central kitchens and self built chicken farms.

This is also a necessary path for Chinese fast food to achieve "butterfly transformation".

However, due to its short development time and still in the exploratory stage, Chinese fast food enterprises are far from forming a strength equivalent to well-known foreign fast food brands.

In addition, the continuous rise in rental prices in commercial districts across the country has also put Chinese fast food, which emphasizes convenience and is eager to expand, in a dilemma.

According to relevant surveys, in the second half of 2021, 70.4% of commercial districts in first tier cities saw a month on month increase in rent, while the proportion of rent increase in second tier cities was 58.8%.

Our country's labor costs are also in an upward cycle.

According to a report released by the Chinese Academy of Financial Sciences, from 2018 to the first half of 2021, the average monthly salary level of sample enterprises increased from 4182 yuan to 5367 yuan, with an average increase of 9.44%.

Nearly 80% of sample companies reported an increase in total salary in 2021, which has brought significant cost pressure to the companies.

Externally, it is a wave of attacks launched by foreign fast food chain brands.

Some foreign fast food brands, relying on their strong supply chain and financial reserves, are adept at dealing with price fluctuations.

Taking a well-known foreign fast food brand's famous "triangle stool" business philosophy as an example, its meaning is to establish trust relationships from multiple parties, obtain the required raw materials at a lower price, and at the same time, the brand's official website lists nearly 60 suppliers.

In 2021, the brand had over 4000 stores in China, and at the same time, the number of stores of the Chinese fast food giant "Lao Xiang Ji" had just exceeded 1000.

How to break the game?

On the path of development, Chinese fast food has been pushed to a place where either progress or retreat by multiple factors.

Chinese fast food, as a "domestic product" in the catering industry, can be expensive, but it should be worth it. In a highly competitive track, earning this "value" often requires more effort and hard work.

With the acceleration of the pace of life, fast food is becoming the "second cafeteria" for office workers or young people at a visible speed of being a regular meal.

The core issue is that the brand power of Chinese fast food is not enough to support the price increase.

Foreign established business partners are clearly better able to capture the hearts of young people. With years of accumulated marketing experience, they ride online traffic, actively cooperate with young people to play memes, and further consolidate brand awareness and expand promotional methods under the backdrop of popular memes such as "Crazy Thursday v Me 50" and "Maimen".

In addition, continuous cross-border collaborations, including collaborations with mobile games, celebrities, limited edition giveaways, and other forms, also continuously provide brand discussion topics.

In contrast, Chinese fast food seems to have a less keen understanding of the Internet, ignoring that the Internet can now be used as a window for dialogue with diners. In fact, "lowering your profile" and "creating people" are one of the means to build brand recognition.

Only when domestic fast food breaks away from the mindset of "the aroma of wine is not afraid of the depth of the alley" and focuses on building brand recognition, people may be more tolerant of prices.

There is still time, and Chinese cuisine has its own charm and strength, which is our confidence. But in business, it may require more effort to find ways to diversify, rejuvenate, and specialize, rather than blindly raising prices.