The Market of Meals

By Li Xiaoyang

For Chinese people， dining means much more than just feeding themselves. Their increasing demand for variety and flavors has driven the growth of a large market， bringing an investment boom to many domestic brands.

In the latest move， Lanzhou beef noodles brand Chenxianggui completed its Series A round of financing worth 100 million yuan（$15.4 million） on July 20， bringing its valuation to nearly 1 billion yuan （$154 million）. Coffee chains such as Saturnbird Coffee， Seesaw and M Stand have also each raised over 100 million yuan since June and the Chinese bubble tea startup Nayuki went public on the Hong Kong Stock Exchange on June 30， banking on strong growth in the market.

The catering industry was once viewed as a traditional one with low growth potential due to non-standard production and low profitability. However， the boom of catering chains with optimized operation models has challenged that notion. Like U.S. fast food chains McDonalds and KFC， many emerging Chinese catering enterprises have developed streamlined production processes and invested a lot in brand marketing.

The industry saw sluggish growth in 2020 amid restrictive measures against the COVID-19 pandemic. According to the National Bureau of Statistics （NBS）， Chinas catering revenue reached nearly 4 trillion yuan （$617 billion） last year， down 16.6 percent year on year. With the suggested containment， it has seen a gradual recovery. In the first half of 2021， the catering revenue exceeded 2 trillion yuan （$308 billion）， up 48.6 percent year on year. Qianzhan Industry Research Institute， a market research consultancy， projected that Chinas catering market will be worth over 7 trillion yuan （$1.08 trillion） by 2026.

“More Chinese catering enterprises are expected to embrace financing and seek stock listings in the next decade. Such a move could help boost brand marketing， expand sales and improve management of the enterprises，”Song Xiangqian， founding partner and Chairman of Harvest Capital， told Caijing magazine.

Sharing the pie

Chinese consumers， especially the younger generation， have attached growing importance to the quality and diversity of food and dining environment and the interior design of restaurants. While they are embracing modern dining styles like coffee and light meals， Chinese-style hotpot， noodles， spicy crawfish and milk tea are still their preferences.

Eyeing the large market， emerging Chinese enterprises have plunged into the business for restaurant chains and online food sales. Many brick-and-mortar stores used to see sound cash flow and viewed it unnecessary to seek social investment. However， restaurant chains such as Xibei that offer traditional cuisine from northwest China were hit hard by COVID-19 last year. Since then， more and more catering chains have sought cooperation with investors to tide over the difficult time.