Serving up a Winner

May 24, 2016 | REPORT

OC&C's latest research shows that in China's booming restaurant market, chains are set to benefit.

  • Chained restaurants outperforming independent counterparts, with reputation for quality, trust worthiness and consistency
  • Haidilao, Pizza Hut and Little Sheep ranking as top three restaurant brands
  • Chinese consumers surveyed dining out two to three times per week, on average
Global consulting firm OC&C Strategy Consultants today launched a report entitled: “Serving Up a Winner – Establishing a Winning Proposition in China’s Restaurant Landscape”, which aims to help brands untangle the diverse, fragmented food service landscape in China.  

According to the report, China’s restaurant market is more vibrant than ever, with growth outstripping other major markets, despite higher volatility. Chinese consumers eat out almost three times a week, on average, and are becoming more sophisticated, amid increased awareness and openness towards international brands. This growth is largely attributed to the explosive increase in China’s middle class, which now accounts for 68 per cent of all urban households. 

In terms of the reputation of specific brands in China, Haidilao is perceived as the most reputable food brand, followed by Pizza Hut and Little Sheep. McDonald’s (7), TGI Friday’s (8) and KFC (9) are the Western brands that ranked in the top 10: 

 

“While other retail segments struggle in the face of “the new normal”, restaurants are becoming more innovative and reaping the benefits of the growing middle class,” said Jack Chuang, Partner, Greater China, OC&C Strategy Consultants. “The arrival and rapid expansion of international chains in the past few years has increased the competitiveness of the market. Both local and international food brands need to design the right business strategy and offer a customer experience that will meet increasingly sophisticated expectations,” he added.  

The report found that Chinese consumers actively seek out new restaurants and are receptive to new formats and concepts such as restaurant theming, healthy lifestyle menus and organic produce, as well as innovative, fusion cuisine. Over 80% of Chinese with a monthly household income of RMB 20,000 or above agree that they actively seek out new restaurants and enjoy eating out at modern, casual restaurants. And 80% of the same group have a high propensity to spend more for a nicer restaurant to indulge or reward themselves, or for a special occasion. 

Food quality, wide choice of categories and service quality come up as the three critical factors while serve speed, convenience and pricing are rated as less important.  

“Getting diners through the door of a restaurant is still challenging. Restaurant staff need to ensure that service is authentic and make creative, personalised decisions to delight guests. In addition, restaurants should provide a wide range of items in their menu, with local favour. Despite increasing competition, the strong performance of international chains signals that success is achievable for foreign players. International chains should not be deterred by fierce competition,” Chuang concluded.  

The study canvassed 2,600 respondents from 21 cities across China, with consumer surveys and restaurant audits held in February 2016. 

For more information or an interview with OC&C Greater China, please contact:

MHP Communications Hong Kong
Greg Kwan
Greg.kwan@mhpc.com 
T +852 2140 6022
M: +852 6021 6948