Foreign food and beverage losses in China "China golden period" has passed?

China's food and beverage market has been rising steadily in recent years, with turnover in 2015, accounting for more than 10% of the total retail sales of social consumer goods. “ eleven ” golden week, the national retail and catering enterprises to achieve sales of about 1 trillion and 200 billion yuan, an increase of 10.7% over the same period last year. In recent years, KFC has faced a series of difficulties in the Chinese market, and some cities even have to close stores to reduce losses. Foreign food and beverage enterprises are generally in a state of loss in China. Is it a big trend to fade out of China?



Foreign fast rising costs facing the development difficulties of



According to the prospective industry research institute "China catering industry development prospects and investment forecast analysis report" shows that from 1 to July this year, the national catering revenue grew by 11.2%. The contribution of the catering industry to the national economy has become increasingly prominent. Among them, the layout of foreign fast food companies is also overweight. For example, McDonald's China plans to set up about 250 restaurants every year in the next 5 years.



In 2016, 1-7 months, foreign investment in China set up 4 new fast-food service enterprises, the actual amount of foreign investment 57 million 370 thousand U.S. dollars, an increase of 69.1%. As of July this year, the cumulative foreign investment in China set up more than 400 fast food service enterprises, the actual amount of foreign investment is about 520 million U.S. dollars.



But in recent years, KFC has faced difficulties in the development of the Chinese market. Some cities have to close stores even to reduce losses. The reason for this phenomenon is because of the rapid development of the western fast food industry in the Chinese market concentrated outbreak. The fast food industry that is high efficiency and low cost, if you hire a lot of American workers, then, will inevitably lead to fast food costs, but if a large number of employment of local staff, then quickly China possibly in terms of product quality and management.



Catering cost growth pressure rise



Catering industry as early as two years ago has shown “ four high one low ” phenomenon, that is, the so-called high energy costs, high labor costs, high property costs, high raw material costs, and low profitability, low profit margins.



For restaurants, the cost of food increased by 10%, food and beverage enterprises gross profit will be reduced by about 3.5%; human cost increased by 10%, gross profit will be reduced by about 3%, while the average level of food and beverage industry has even less than 5%. Especially for fast food enterprises, it will reduce the pressure brought about by the increase of labor costs, and it is related to the profitability of enterprises.



Despite the difficulties, but the industry believes that foreign companies engaged in the fast-food service will continue to be optimistic about the market China, investment China, China share reform and opening up and economic development dividend, which local fast food, also means that the persistent competition. If China's own brands of fast food can not share the corresponding market share as soon as possible, foreign fast food will still occupy a very dominant position.