Report | 2024 Annual Report on China's Catering Industry

The China Hotel Association recently released the 2024 Annual Report on China's Catering Industry, which shows that the catering revenue in 2023 exceeded 5 trillion RMB for the first time, reaching 5.289 trillion RMB, a year-on-year growth of 20.4%. The industry has been accelerating its recovery under the trends of mass consumption and digital transformation, with pressures from rising costs and intense competition.

In 2023, the total revenue of China's catering industry exceeded 5 trillion RMB, reaching 5.289 trillion RMB, a 20.4% increase compared to the previous year. Catering revenue from units above a certain scale reached 1.3356 trillion RMB, growing by 20.9%, leading other sectors in retail sales growth.

All 31 provinces (regions and municipalities) saw positive growth in catering revenue, with an average growth rate of 18.5%. Guangdong led with 576.344 billion RMB, followed by Jiangsu, Shandong, Zhejiang, and Sichuan.

With the rapid growth of county-level economies, the catering market is continuously shifting to lower-tier markets. Brands such as Luckin Coffee, Heytea, and Starbucks have collectively expanded in county markets. For instance, Starbucks added 290 new stores in the fourth quarter, entering 78 new county-level markets, further expanding its presence in lower-tier cities. The release of consumption potential in county markets is closely tied to the improvement of local transportation, logistics, and cold chain facilities, which provide support for brand expansion.

Affordable, mass-market dining has become the mainstream, with consumers increasingly focusing on cost-effectiveness. Between 2020 and 2023, the price range of freshly made tea drinks changed significantly, with the proportion of tea drinks costing over 20 RMB dropping from 32.7% to 3.6%, while those under 10 RMB rose to 29.6%. Fast food, snacks, and other high-value categories have shown good expansion, making these more competitive in the market.

Digital operations have become a key focus, with the share of delivery services in catering revenue reaching 10.4%. Nearly 50% of catering businesses reported increased sales from delivery. By the first half of 2024, the online penetration rate of catering businesses reached 53.9%, up 11.5 percentage points compared to the previous year.

E-commerce sales accounted for 19.1% of the total revenue of catering businesses, increasing by 14.1 percentage points year-on-year. New retail methods such as live-streaming sales and online group buying have injected momentum into catering businesses, making online channels a significant source of income.

The catering industry has a low entry threshold. In 2023, 1.347 million new catering businesses were registered, while 1.056 million were closed or revoked, indicating a significant increase in industry exit rates. Industry insiders point out that rising raw material, rent, and labor costs have reduced profitability, making the catering industry no longer a "money-making" sector and difficult for amateur players to sustain in the long term.

The "star restaurants" and "internet celebrity restaurants" that rely on traffic and high premiums are increasingly unsustainable. Consumers are more inclined to choose catering brands with high cost-effectiveness and product quality. If brands fail to strike a reasonable balance between product and price, they risk losing out in the competition.

The raw material cost of catering businesses accounts for 45.2% of revenue, labor costs account for 22.2%, and rent costs account for 8.1%. Although the growth rate of some costs has slowed, the overall cost pressure remains, especially in first-tier cities, where high rents and labor costs further squeeze profit margins.

The average gross profit margin for surveyed businesses in 2023 was 46.4%, an increase of approximately 6 percentage points compared to 2022. The average net profit margin was 7.5%, up 4 percentage points from last year. However, only 46% of businesses reported an increase in net profit margin, indicating that the overall profitability of the industry remains under pressure.

The employee turnover rate in the catering industry is high, with an annual average turnover rate of 16.1%. The average salary for front-line employees was 5,039.57 RMB, an increase of 7.4% year-on-year, while the average salary for management was 10,149.97 RMB, with a 5% increase. This reflects the industry's significant personnel turnover under salary pressure.

Catering businesses have implemented multiple anti-waste measures both in service and production. On the service side, measures include order reminders, takeaway services, and the "Clean Plate Campaign." On the production side, businesses adopt scientific meal planning, optimize food utilization rates, and offer smaller portion sizes to reduce waste.

These measures have achieved certain results. According to the survey, after the implementation of anti-waste measures, kitchen waste decreased by 14%, waste disposal costs were reduced by 9.8%, and the use of takeaway containers increased by 2.5%. This reflects both an improvement in consumer awareness of saving and substantial achievements by businesses in reducing waste.

65.7% of businesses indicate that they are focusing on digital transformation, 64.2% on brand development, and 56.7% on supply chain optimization, showing that these areas are key to steady development. The report also notes that expansion plans for the next year will be more conservative, with businesses intending to make new investments decreasing by 10 percentage points compared to 2023, reflecting a more cautious attitude toward expansion.

In 2023, there were about 200 investment and financing events in the catering industry, with the disclosed total amount significantly decreasing compared to 2022. The catering supply chain, fast food, snacks, and coffee sectors remain the focus of capital attention. Supply chain construction and product development are the primary destinations for funding, highlighting the continued importance of supply chain optimization in the recovery of the industry.

The above content is sourced from the 2024 Annual Report on China's Catering Industry by the China Hotel Association.

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