Catering Industry Under Epidemic Situation: Self Help And Embrace Together

The restaurant industry is almost the largest retail segment hit by the epidemic.

Since January this year, a number of temporary measures have been promulgated from Wuhan to the whole country to contain the spread of the epidemic, prolong the Spring Festival holiday and strengthen tourism restrictions. It is necessary to go out and eat in order to meet the needs of meeting and social needs. The epidemic situation has been dealt with in a 360 degree way.

According to the latest data released by the National Bureau of statistics, the total retail sales of consumer goods in April totaled 28178 billion yuan, down 7.5% from the same period last year. According to the consumption type, retail sales in April were 25871 yuan, a decrease of 4.6%; catering income was 230 billion 700 million yuan, down 31.1% compared with the same period last year, a decrease of 15.7 percentage points from last month. In 1-4 months, retail sales of 98425 billion yuan, down 13.1% compared with the same period last year, and the restaurant income was 833 billion 300 million yuan, down 41.2% from the same period last year.

If compared with last year, the situation is even more tragic. However, with the improvement of domestic epidemic situation, the catering industry has gradually improved after entering the May. Peng Yanyan, director of consumer goods industry at UBS Investment Research Department, told the twenty-first Century economic report that "from the perspective of the urban strata, some low level cities have seen faster consumption recovery than those in high speed cities, especially in the catering industry. Catering in low level cities has basically been restored since May. Catering in the second tier cities has yet to be resumed.

Behind the backwarding of the catering industry is the struggle, collapse, disappearance, restart and shuffle of the catering brand, which is the resumption of confidence in the consumer side, and a large-scale "self help" and "tug of heating" in the catering industry. In the second half of the epidemic situation is not clear, the catering industry needs to find more self-protection and compression measures to "live".

"The impact of the epidemic on the catering industry is all-around and multi-dimensional, from upstream to downstream, from the industrial end to the consumer side." Zhu Dan Peng, a food industry analyst, told the twenty-first Century economic report that "a higher demand for anti risk ability of catering enterprises has been put forward. The enterprises that survive through the epidemic situation are relatively high in gold content, risk resistance and brand strength. Next, small and medium-sized enterprises will be more difficult to ride. Opportunities may be more concentrated in the head business. "

"Fatal" cash flow

The scale of different brands and the different store formats have different effects, but they have been affected to varying degrees from rent, revenue, suppliers and employees.

In February 1st, Jia Guolong, founder and chairman of Xibei restaurant, said publicly that the next store of Xibei's 400 lines had basically shut down, leaving only more than 100 takeaway businesses, and expected to lose 7-8 yuan a month before and after the Spring Festival. At the same time, there were more than 20 thousand employees spending about 150 million per month, and the cash flow on the business account lasted 3 months.

Seabed also mentioned the impact of the epidemic in the 2019 earnings report. The epidemic, quarantine measures and travel restrictions "had a significant impact on the group's business since January 2020. Since January 26, 2020, the group has suspended operation of all restaurants in mainland China to curb the spread of the epidemic. Since March 12, 2020, the group has reopened most of its closed stores.

"The most difficult period of operation is February, because many stores do not move away." Zhang Zhenwei, chief executive of scrape restaurant, told the twenty-first Century economic report that "our stores are all open in the shopping mall, which is greatly affected. On average, each shop is closed for about half a month, and stores are open and closed. After the gradual recovery, by the end of March has almost completely opened, in April, our performance level has returned to 9 or more.

"The biggest pressure comes from being unable to do business. The cost of all costs, such as rent and staff salaries, is unavoidable." Zhang Zhenwei said that because the group's cash reserves have always been relatively high, "we also have loans with banks, but basically only credit, not really used."

According to its 2019 earnings report, the group voluntarily stopped 941 restaurants in mainland China since January and has reopened 866 restaurants as of March 30th. As of December 31, 2019, the equivalent of cash and cash was 785 million yuan.

Backed by listed companies, the head of the marketing department of Yu Garden culture and catering group told the twenty-first Century economic report that many of its restaurant chain brands, "the epidemic affected the overall passenger flow and had a great impact on revenue. The most difficult period is mainly during the Spring Festival. We had arranged enough personnel and food supplies, unexpected outbreaks, and caught by surprise. Basically, it has recovered about 6.

For smaller brands, the cash flow crisis is more fatal because of higher fixed costs.

"First of all, there is a bigger problem of cash flow, because the sharp decrease in income leads to financial warning, the pressure of rent is huge, and the cost of personnel is around 25%, which belongs to the normal level of the industry." Li Gang, the founder of a sit down and forget, said in an interview with the twenty-first Century economic report that there are 10 stores at the same time. There are about 10 cooks in each store.

During the Spring Festival, it is necessary to prepare goods in advance for about 15 days to 20 days, and the Spring Festival is also a busy season. Originally, the new year's Eve dinner was booked better than usual. There were more than 100 tables, but only one or two tables left, but the cost of stocking had been put in.

From the point of view of classification, "from the standpoint of standardization, Chinese restaurants are more likely to be infected than western fast food chains, and some very good Chinese restaurants may thrive in this round of outbreaks." Peng Yanyan thinks, but from the perspective of big business logic, Chinese food and beverage encounter more problems. First, there are many kinds of products. Two, the kitchen area is too large. Three is the need of the chef. Besides the chafing dish, most Chinese food needs chefs. "Fixed costs are higher, and when people flow down, they have a greater impact on earnings. We also see that some Chinese medium-sized catering companies have seen some closes recently, and I believe they are not individual cases.

"Blood transfusion" and "self rescue"

In order to reduce the rent burden of small and micro enterprises and individual industrial and commercial households, the executive meeting of the State Council, held in April 21st, decided to increase the weight of inclusive financial assessment and reduce the provision coverage of small and medium-sized banks, and promote financial services for small and micro enterprises. It also promoted the small and micro businesses and individual industrial and commercial businesses of the small and medium-sized enterprises that rent the state-owned housing, and the rent for the first half of the year was exempt from 3 months. State owned enterprises, especially enterprises and institutions such as central enterprises, universities and research institutes, should take the lead. Lessor's rent reduction can be deduct from the real estate tax and urban land use tax in accordance with the regulations, and guide state-owned banks to support the lessor of the rent relief to give preferential interest rate mortgage loans as needed. The reduction of rent for non-state-owned housing can enjoy the above policy preferences equally.

From the specific implementation, Zhang Zhenwei said, "most stores have an average rent of one and a half months. Most of the state owned shopping malls comply with the state policy to remove funds for about three months, and other owners themselves also have pressure, and the degree of relief is different.

Li Gang said that there were three owners in the 10 shops in one seat and one forgotten as state assets, "some have been deducted, such as the Sanlitun store, some are not in place, or the degree of relief is not the same, from 15 days to three months." The general rent is paid quarterly. If it has already been delivered, it will be extended later.

Generally speaking, the Shopping mall or property owned by state owned capital is more active in supporting rent by government policies. The owners' business philosophy, the business hours during the epidemic period, and the cooperative relationship between the brand itself and Shopping mall will directly or indirectly affect the intensity of preferential policies. Most of the preferential policies occur in the months when business hours are affected.

Stores opened in Shopping mall are more seriously affected. Due to the restriction of property, the length of the shops and business during the epidemic period has been greatly affected. And because of the closed space characteristics of Commercial Plaza, the current level of people's flow has not yet fully recovered. Peng Yanyan said that with the two quarter rent no longer waiver, medium-sized restaurants may be closed more. "Especially for some non main market, there is no scale advantage, it is difficult to continue. Now, from the perspective of retailers' recovery, Shopping mall may be the last second, the recovery rate is about 60%~80%, and the worst retail format is night fair, such as KTV; compared with the other, the traffic volume of street vendors is better than that of shopping malls.

Street shops are more flexible because of their business hours, and they are more convenient to operate. Unlike almost all Shopping mall, they are not allowed to enter the store during the epidemic period, so the performance of the street store has been smaller. Its DQ, John and Brut Eatery, Yuepu restaurant and CFB group CEO Xu Weilun, who met four food brands such as Facebook, said in an interview with the twenty-first Century economic report that, generally speaking, large restaurants and restaurants that emphasize delicate and dining atmosphere, because of the complexity of menus and raw materials, many foods have a relatively short shelf life, and the implementation of many epidemic prevention measures in restaurants is more difficult. Local workers are unable to go to work.

The crisis of large head enterprises has aroused public concern, but because of its brand advantage, it is easy to get support. A week after Jia Guolong's "poor mouth", Xibei received 430 million yuan credit from Pudong Development Bank, of which 120 million yuan arrived in February 7th, mainly used to pay wages for Xibei. Jia Guolong said that the interest rate of the loan was reduced on the basis of the benchmark interest rate.

In seeking financial support and assistance, small and medium-sized enterprises are much more difficult than big ones.

"Deeper pressure comes from April March, and it is still not clear which direction the epidemic will develop." Li Gang said that at that time, he contacted the bank urgently. "We had never had commercial loans before, and there was no cooperation with banks. Because there is no fixed assets, it is very difficult for restaurants to borrow money from banks. At that time, both Beijing and Hangzhou applied for a lot of materials, including my personal property. At the beginning, the bank agreed to 3 million of the loan, and finally awarded 1 million. At present, it has not moved it. It is said that the epidemic will probably be repeated in October. This money will enable us to have more anti risk reserves.

Peng Yanyan said, "apart from brand, the catering industry has no fixed assets, because shops are rented and stock is not valuable. If the scale of the enterprise is too small, it is very difficult to negotiate with the bank or to have policies with the government without bargaining power. If the attendance rate is only 20%~30%, the best way for these enterprises is to shut down, at least there is no fixed cost, and the fixed cost of the catering industry is 50%. "

Another measure of self-help comes from "warm up with suppliers". Li Gang explained that the Yunnan food restaurant itself is relatively small, suppliers can choose very little, the mode is also more traditional. "They are very weak in the face of the epidemic and do not have much social resources. A lot of vegetables are rotten, because most restaurants that they serve are not allowed to open. Later, he sat down at a store in Sanlitun, Beijing, where he planned a number of "market" activities to solve the slow-moving supplier inventory and sell seasonal vegetables and local specialties.

"At that time, the atmosphere in Beijing was still tense, but the accident was that we did second matches, and the people in the restaurant had already started queuing up." Li Gang said that this is the enterprise's self-help, and also the industrial chain's heating up. "Not only has driven the recovery of our partners, but also our own stores have benefited greatly. By the end of March and early April, the Sanlitun store has recovered about 90%."

Industry accelerated reform

In recent reports, McKinsey said that the impact of the epidemic, the restaurant channel cliff fell, the majority of chain restaurant brand revenue fell more than 50%. Takeaway business has become the only highlight of the catering industry, but it is also affected by factors such as insufficient distribution staff and slow rework of catering staff. Sampling analysis showed that the takeaway rate of the first and second tier cities during lunch time in mid February was only 40%~60%.

Like other industries, the catering industry is also facing changes and developing "new formats". Takeaway is a very effective drainage method in this epidemic.

The Yu Garden executives said that at present, all stores have the platform and the hungry takeaway business, "each brand has launched its own community fans group. As of now, there are more than 50 community groups, more than 10 thousand people, and all stores have established online shopping centers. At present, turnover can basically account for about 10% of the store's performance.

Barjohn, a group under CFB, accounts for about 6 of the total sales and keeps growing.

"Takeaway accounts for the highest proportion of the entire catering industry in the world. Last year, 8% of the restaurant industry came from takeout. " Peng Yanyan believes that for catering enterprises, takeaway is the traffic entrance. "But many brands insist on not taking away before they come. There is no way to get rid of the epidemic. They are not prepared for takeaway. For example, the work of the menu and store leader is not ready."

Li Gang said that takeaway accounted for about 5%~10% of the revenue in one sitting and one forget, and there was not much change before and after the outbreak. Takeaway has become a life-saving straw during the epidemic, but it has not been particularly prominent. At present, if a store sells a takeaway, there will be some bottlenecks. There are no special channels and windows from the kitchen design to the process. But in the future, we will consider some other modes to take the lead in takeaway or find some new growth.

Nelson said in a recent report that the eating habits of mainland Chinese consumers may undergo permanent changes after the global new crown disease has subsided. 86% of respondents in mainland China said they would eat more at home. Other Asian markets showed similar results. 77% of Hongkong consumers also planned to eat at home more often, while 62% of respondents in South Korea, Malaysia and Vietnam responded similarly.

The demand for packaging and food delivery services is increasing, with 24% and 37% of mainland consumers saying they are more willing to choose these two meals before the epidemic.

Over the past five years, China's catering industry has been a breeding ground for innovation and change. As consumers' lifestyles are becoming more and more urbanized, more and more busy and more closely linked, food delivery and fast consumption are rapidly changing the traditional catering industry and people's dining experience. Nelson, President of China's Justin Sargent, said that these new consumer behaviors are rapidly developing into a new normal. "We initially thought consumers were consuming panic, but now we can see that these behaviors have existed in the market for some time. Consumers will return to the same store many times, so this is clearly not a panic consumption. There is no doubt that consumers have moved from "busy lifestyle" to a more "home consumption" mode.

For the future trend, "the impact of the epidemic is the long tail concept, which has great impact on the domestic and foreign economies. This year, GDP estimates at least affect 40%~50%. If the epidemic is no longer outbreaks, the overall volume of the economy will return to 80% of the total before the epidemic. Zhang Zhenwei believes that under such circumstances, the catering industry needs to quickly adjust its structure. "How can we keep making profits if the income is only 80% in the past? We must reduce costs. First, we can talk about the long term rent reduction or price reduction with commercial real estate. Two, we can streamline some aspects in staffing services, and customers and restaurants should get used to this trend.

The epidemic has also accelerated the transformation of the industry. "The industry is heading for a meager profit era. One is that resources lean to the head and the strong are strong; the two is to promote industrial upgrading, technological upgrading and more meticulous management." Zhang Zhenwei said.

According to McKinsey, from the perspective of the industry chain, this epidemic situation may accelerate the transformation of the whole channel that the fresh food industry has already been occurring, and the 2B end of serving customers such as small and medium-sized restaurants may also shift from traditional wholesale market to specialized food supply chain companies and online. This requires integrated enterprises to speed up the construction of full channel service capabilities and realize the upgrading of sales channels.

Xu Weilun pointed out that after consumers have experienced the convenience of fresh electricity providers, there is a great possibility that they will continue to take advantage of this channel. For the catering industry, it will become a new growth opportunity to actively layout retail products, expand business lines and increase retail sales of e-commerce. In fact, whether Chinese or Western food and beverage, the key to control costs is the scale and efficiency of the process. Chain stores with larger volume, lower menu complexity, better storage and loss control of raw materials, and higher chain restaurants with higher kitchen processing cost have better cost control. Rent, manpower and food materials are always the main cost. Chinese food is more complicated than western food because of the relative complexity of food products. How to get a better balance between standardization and taste appeal is the key to the profitability of all catering enterprises.

Reporter observation of the restaurant industry recovery confidence come from?