Race for single customers

Along with rapid changes in demographics and economics , Chinese consumer behavior is also undergoing significant changes. In particular, the increase in the group 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 the F&B giants in China. 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 small pizzas that are half the size of regular Pizza Huts, priced at just 19 yuan ($2.70). Such small portions allow diners to enjoy more dishes, even when dining alone.

A Yum China spokesman said the company is targeting a growing number 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 model has performed beyond expectations, he said.

Not only Yum China, Yi Wei hot pot restaurant chain also quickly changed its strategy to serve customers who eat alone and small households. Yi Wei launched a unique conveyor belt hot pot model. Accordingly, each person will be served a small hot pot with a sufficient portion of meat, along with a conveyor belt system to choose a variety of other hot pot 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 accidental, but reflects the country's rapid demographic change. According to 2020 statistics, China has 125 million single-person households, more than double the number 10 years ago. The percentage of single-person households in total households has increased from 14.5% to 25.4% in the same period.

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

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 app operator Meituan 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 choose simpler, more economical meals. Statistics show that sales at Chinese restaurants increased by only 3% in July compared to the same period last year, the lowest growth rate since China lifted COVID-19-related 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