Race for single customers

Along with rapid demographic and economic changes, Chinese consumer behavior is also undergoing significant changes. In particular, the increase in the number of single people has created a new potential market for the Food and Beverage (F&B) industry, forcing the "big guys" in the industry to adjust their business strategies to meet the needs of this customer group.

Pizza Hut and KFC stores in China. (Source: CNBC)

It’s not hard to see the shift in business strategy among China’s F&B giants. Yum China, which operates major fast-food chains like Pizza Hut and KFC in China, launched its Pizza Hut Wow store concept in May, focusing on a menu of bite-sized pizzas that are half the size of regular Pizza Huts, priced at just 19 yuan ($2.70). The smaller portions allow diners to enjoy more food, even when dining alone.

A Yum China spokesperson said the company is targeting a growing segment of small households. Yum China has converted more than 100 of its 3,500 Pizza Huts in China to the Wow format and aims to double that number by the end of the year. So far, the new format has performed well, he said.

Not only Yum China, Yi Wei hotpot restaurant chain has also quickly changed its strategy to serve customers who eat alone and small households. Yi Wei has launched a unique conveyor belt hotpot model. Accordingly, each person will be served a small hotpot with a sufficient portion of meat, along with a conveyor belt system to choose a variety of other hotpot dishes. Launched in August last year, Yi Wei now has about 50 restaurants of this type in major cities and plans to open 200 more restaurants by 2026.

This trend is not a coincidence, but a reflection of the country's rapid demographic change. According to 2020 statistics, China had 125 million one-person households, more than double the number 10 years ago. The percentage of one-person households in total households increased from 14.5% to 25.4% over the same period.

Jason Yu, CEO of consultancy Kantar, said that while there weren't many products and services for single-person households in the past, more and more brands are realizing that this is a potential market for new business models.

The growing number of single-person households is also affecting the online food delivery industry. Restaurants on major apps like Meituan are now pushing combos for single customers. As of June, about 1.52 million food sellers on Meituan offered small-portion dishes, up 11% from the beginning of the year. The total number of such dishes increased 7% to 8.32 million.

The company that runs the Meituan app said the smaller portions are also part of a trend toward reducing food waste and eating healthily.

In addition, the economic slowdown has also caused consumers to tighten their purse strings and opt for simpler, more economical meals. Statistics show that sales at Chinese restaurants increased by just 3% in July compared to the same period last year, the lowest growth rate since China lifted COVID-19 restrictions in December 2022.

In that context, the single-customer business model offers a suitable solution for both restaurants and diners. However, the problem for restaurants is how to balance attracting single-diners - who are very price-sensitive - and ensuring business profits.

Source: https://baoquocte.vn/thi-truong-am-thuc-trung-quoc-cuoc-dua-gianh-khach-hang-doc-than-293244.html