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Degraded consumption, low prices will be the new normal in the catering industry

Degraded consumption, low prices will be the new normal in the catering industry

2020-06-08 395

 
On June 2, Le Caesar pizza announced the price reduction decision to the outside world in the form of an open letter, and especially stressed that "it is not a short-term promotion, but a long-term price reduction". The price of some products dropped by 20-25%.
 
01 & nbsp; long term price reduction is only for the purpose of expanding the market & nbsp;
In the past 10 years, Le Caesar has more than 130 stores in China, mainly in Guangzhou and Shenzhen.
 
Lekaisas price reduction event has been unfolding for half a year, but it has nothing to do with the epidemic in fact. Last year, we studied and judged the future changes in consumption structure, and believed that it would go to Japans economy after 1990.
 
After 90 years in Japan, we went out of those brands and found out the corresponding brands: UNIQLO, Toyota and McDonalds.
 
"Learn the basic and popular product matrix of UNIQLO, and make the product logic with good quality and high cost performance; in addition, we learn Toyotas lean production to reduce seven major internal waste, which is our basic logic." &Chen Ning, founder of Le Caesar pizza.
 
The implementation of hourly wage system, from the day shift salary to the hour shift salary, the store time limit increased by 30%;
 
Strengthen digital transformation, take out order profit increased from 42% to 49%, increasing order profit and online competitiveness;
 
Control the cost of the supply chain. In the case of rising pork prices and the appreciation of Thai baht, reduce the cost of food by 10% through SKU simplification and supplier concentration, and keep the proportion of food cost stable throughout the year;
 
Continue to deposit the basic product matrix, and enhance product confidence through continuous micro iteration and food upgrading;
 
 
"The epidemic actually delayed our pace. During the epidemic, we should first make the same stores data look good. So on April 8, we launched the" dark forest action "to buy 100 yuan coupons on 9.9, which lasted until May 31. Then, in summer, we didnt need to do any activities on June 1. Business must be good. Then on June 2, we sent a letter of" long-term price reduction "
 
In fact, its not a simple way to cut prices and lengthen the whole timeline. What drives it? Driven by vision, mission and values.
 
"What kind of brand do we want to be? What needs do we want to host consumers in the next 10 years or more? Only based on this can we make changes." Chen Ning said.
 
In addition, Le Caesar began to transform its stores in Shenzhen and Guangzhou to make fried chicken, positioning its category as pizza x fried chicken, that is, the new store model can be understood as McDonalds, replacing hamburgers with pizza.
 
Now there is only one oven production line in the store. It took ten years to understand the oven research. It is ready to take another five years to study the frying oven, enriching the product line and consumption scenarios.
 
"We see that fried chicken has a chance to break through. With the development of sensor technology and cold chain logistics, we can eat cold and fresh chicken instead of frozen chicken. The characteristic of cold and fresh chicken is that it is tender to juice, which is the opportunity point." Chen Ning said.
 
Internal lean production to reduce waste, but also the implementation of digital, accumulated the next cycle of competitiveness.
 
On June 1, the first store of Le Caesar in Kunming officially opened, which launched the first shot in Southwest China
 
After the outbreak, some high-quality and low rent spots came out. He resolutely accelerated his pace, changed the original plan of opening 34 new stores, and increased the number to 70.
 
In the 18th and 19th years, Le Caesar optimized its stores, quickly closed 20 stores with too high rent and poor performance, and "quickly closed and cautiously opened stores" showed results at the end of the year. The groups profit increased by 60 million yuan compared with that in 2018.
 
In order to adapt to the expansion, in terms of store opening strategy, rakesar will make adjustments from the original "base area" strategy, which focuses on the potential market and adopts the "red flag" strategy. At present, Kunming, Nanjing, Hangzhou and other markets have entered the companys vision.
 
In addition, the organizational management and dividend mechanism of the store will also be adjusted. Recently, I was making an action to invite the old employees back. Some old management teams lost to other enterprises. I took this opportunity to invite them back, and I had the organizational guarantee.
 
02 & nbsp; 10% drop brings 20% passenger flow growth
Coincidentally, McDonalds also issued a statement on the same day, saying that it would open the "super breakfast month" activity on June 8, with a minimum price of 30% and only 5 yuan.
 
In addition to the half price activities on Monday membership day, from June 4 to July 6, McDonalds started to buy one free one extra value activities for the whole line of French fries. There are many desserts or drinks at the restaurant counter and dessert station that can enjoy the second half price.
 
Regarding the price reduction, McDonalds said that it has more than 50 suppliers of food materials in China, and more than 95% of the food materials are purchased locally. It has the ability to reduce costs through economies of scale.
 
In the catering industry, there is a 1:2 theory, that is, the active price reduction of enterprises once, every 10% reduction can bring 20% passenger flow growth. &For McDonalds and Le Caesar, the proportion should be 1:3 or higher.
 
Chen Ning also made a calculation. If the price reduction brings about a 30% increase in the number of customers, the profit will be equal. If the number of customers increases by more than 30%, it will be better than before. This is a key figure.
 
If the gross margin of McDonalds products is calculated at 60%, the output per square meter of McDonalds and Le Caesars stores will only be higher after the price reduction.
 
Compared with the cash loss caused by the price reduction of single product, the output per square meter of the store is undoubtedly a more critical financial indicator to measure the health of a catering enterprise.
 
Whats more, the increase in passenger flow brought about by the price reduction is likely to turn into a stable source of customers for McDonalds and Le Caesar in the future, which is particularly valuable for McDonalds and Le Caesar that need to be larger.
 
McDonalds price reduction goal, in addition to passenger flow, is to seize KFCs market share, KFC also quickly made a market response to the price reduction.
 
For KFC and McDonalds, we have to face up to the impact of a number of local fast food chains such as real Kung Fu and Lihua Fast food on their business performance.
 
These local fast-food chain enterprises, or with flexible sales methods, or rich product lines, have brought a lot of operational pressure to foreign fast food.
 
But from the current market feedback, McDonalds has obviously tasted the sweetness of price reduction.
 
03 & nbsp; price performance ratio will be the new normal of catering industry & nbsp;
The leverage ratio of Chinese families is as high as 110.9%. Buying houses with six wallets and investing in the stock market have put a lot of people under great debt pressure. Thirdly, people used to be optimistic blindly and consume ahead of time, with little savings.
 
Because the epidemic began to control consumption. Before, I made one dollar and dare to spend nine dollars. Now, I break one dollar into two and spend half. If I can save, I will save.
 
"When peoples income shrinks, its impossible to have retaliatory consumption. Instead, we need to reduce the level and frequency of consumption. For example, I used to have dinner with friends, but now I rarely go out once a month; I used to eat and drink a lot, but now I can eat fast food; and some people are used to cooking at home. "
 
If the epidemic prevention and control is a wolf, then "consumption degradation" is a ferocious tiger, and its impact is more long-term and profound.
 
When people are lack of confidence and expect to reduce their income in the future, they will tend to consume rationally and reduce their desire for consumption. This makes the road of food and beverage recovery longer and the industry more competitive.
 
"I think the next step is the return of daily needs. At this stage, the quality and brand of catering are the foundation." Said Zheng Rushi, founder of rougamo Shaanxi noodle restaurant, senior brother.
 
In fact, the more dangerous it is, the more close consumers are, the more they choose to believe in the power of brands.
 
People no longer pursue conspicuous consumption, but are more realistic. Every penny is spent with value. The recognition of quality and brand is stronger. After McDonalds and Taiji returned to business, there was a queuing phenomenon.
 
At this time, food and beverage enterprises should not replace inferior ones with superior ones in terms of food quality, so as to save costs and reduce food standards; in addition, efforts can be made in the production process, such as advocating selling on the spot, showing files, making on the spot, and taking directly, so as to improve consumer value perception.
 
Big brand, high quality, low price, the initiative of the enterprise to show good will undoubtedly have a strong appeal to consumers. But behind the high quality and low price, there must be enough stores, abundant capital power, strong brand bargaining power, perfect supply chain system and sophisticated management mode to support, which is no different from a fairy fight.
 
In the past two years, the emerging strong experience, focus on the scene and upgrade of consumer food and beverage has an urgent shift, and it is transitioning to the ultimate cost performance.
 
Haidilao 9.9 yuan noodle restaurant, Xibei restart fast food, local chicken speed up the national expansion, Xi tea push Xi small tea, Le Caesar and many other brands of customer unit price exploration A fast-food trend of meeting rigid needs and pursuing ultimate efficiency is becoming a reality.


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