Summary in Plain Language
This report, based on the real experiences of Brother Monkey, a person who has been recycling used catering equipment in the Pearl River Delta for many years and is nicknamed the "Catering Undertaker," reveals the hidden truths about the domestic catering industry following last year's delivery subsidy war. All catering owners initially thought that the platforms were spending money on subsidies to help businesses, but in the end, this led to a significant erosion of industry profits. The average price per in-store customer transaction dropped back to levels from 10 years ago, with 75% of delivery orders costing less than 15 yuan. A large number of small businesses, including established restaurants that had been in operation for decades, went out of business. What was once a "path to wealth" for ordinary people with no resources to start a business has now become a "hardship path" where survival is the main goal. Even the industry of recycling used equipment, which was once associated with business failures, has become extremely popular, serving as a unique barometer for the health of the real economy. The small owners who have woken up to this situation are no longer reliant on the platforms; they are starting to generate their own traffic and build a loyal customer base, gradually taking control of their own businesses.
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Detailed Explanation
1. The subsidies from platforms are not as generous as they seem; over 70% of the cost is borne by the businesses
Most consumers think that the 9.9 yuan meal deals and 1 yuan drinks during the delivery war were subsidized by the platforms to attract customers, benefiting them. However, the reality is that the platforms only cover about 20% of the cost, with the remaining 70%-80% falling on the businesses. Additionally, the platforms take a commission, so when consumers pay 100 yuan, the businesses might only receive 30-40 yuan. This puts all catering owners in a dilemma: if they continue to rely on subsidies, orders may increase significantly, but each order results in a loss until their cash flow runs out. If they stop the subsidies, the customers they acquired with the low prices will leave, and their daily turnover can plummet from several thousand yuan to just a few hundred yuan. Moreover, the subsidies have changed people's consumption habits—seniors who never used to order food delivery now do so, shifting the business from in-store to online, which deprives businesses of their most profitable in-store customers and results in no profits.
2. The catering industry has shifted from a path to rapid wealth to one of just making ends meet
Ten years ago, opening a catering business was seen as a reliable way for ordinary people to improve their lives. With good food and location, it was a common path to success, even leading to opening chain restaurants and becoming business owners. But now, the expectations have changed. No one talks about opening chains, building brands, or making big profits. The primary goal is to minimize costs and quickly recoup investment. This mindset is also reflected in the used equipment market: while new business owners used to buy brand-new equipment, now they first contact Brother Monkey to find cheap used equipment. Ironically, despite the hardships in the industry, many people from other sectors (construction, clothing, retail) are still entering the catering business because other industries offer fewer opportunities for employment.
3. The popularity of the "Catering Undertaker" business indicates a cooling real economy
The nickname "Catering Undertaker" may sound ominous, but Brother Monkey's business is a accurate reflection of the real economy's health. He used to collect equipment from 40-50 failing businesses a month; after last year's delivery war, he could collect equipment from 40-50 businesses in just 10 days, and his warehouse expanded significantly. Previously, most failures were small, family-owned businesses, but now even large, established restaurants with high investment and fixed costs are closing. In the first half of this year, he collected equipment from 21 large restaurants, indicating that the industry's downturn is more than just a temporary slump. The surge in the used equipment market (used office furniture, supermarket shelves, computers, storage equipment) shows that people are being cautious with spending and cutting costs across all sectors, not just in catering.
4. Small owners have taken back control of their businesses
Previously, most catering owners relied on platforms for traffic and subsidies. After the delivery war, they realized they were at the mercy of the platforms. For example, a business owner who opened 8 Hunan restaurants ignored the platform's low-price promotions, instead using social media to engage with customers and build a loyal community. His new restaurant, with a monthly rent of only 8,500 yuan for a 300-square-meter space, was much more profitable than before. Even less educated business owners are now using AI to create menus, design posters, and produce videos, managing their business independently without paying high commissions to platforms. This new approach, which does not rely on platforms, will help the industry return to a more rational state.