Chinese foodservice – Part 1: A market in transition

Since China’s opening and reform movement began in 1978, the country’s foodservice market has grown rapidly, reaching a value of over CNY 5,200bn by 2023. Dining out in China has become increasingly common. However, fierce competition has suppressed pricing in the market. As the market nears saturation, it needs to transition toward consolidation to eliminate unhealthy price competition and focus on value growth.

Meanwhile, challenges like escalating labor costs have prompted smaller players to exit the market at a faster pace. In contrast, leading players are expanding their network to lower-tier cities via franchising. As franchising allows brands to step back from daily operations, they need to shift their focus to high-level decision-making, such as managing relationships with franchisees, further developing their scale through overseas expansion, and multi-brand development, all of which require significant resource allocation.