The Impact of Price Wars on China’s Catering Industry
In Beijing, catering companies with annual revenues exceeding 2 million yuan saw an 88.8% year-on-year decrease in profits in the first half of the year, dropping to 180 million yuan. Profit margins also plummeted to 0.37%, highlighting the industry’s struggle. Shanghai’s operators fared even worse, experiencing losses totaling 770 million yuan, a stark contrast to last year’s profits of 1.7 billion yuan.
The price war reflects the broader trend of consumer downgrading
Caterers are lowering prices in a bid to attract consumers, but this tactic could lead to a damaging price war. Despite the challenges, some small businesses refuse to compromise on their pricing, emphasizing the need for recovery in the domestic economy to alleviate the industry’s woes.
The best remedy is still the recovery of the domestic economy
Amidst the economic downturn, prominent food and beverage companies have already reported bleak results, with closures becoming a common occurrence in the industry. The call for government intervention and industry regulations to curb the price war grows louder as businesses strive to survive in these challenging times.