Summary of Key Points
Recently, companies in the fast-moving consumer goods industry, such as those producing prepared meals and frozen foods, have resorted to a subtle method of reducing salaries under multiple pressures: they set performance indicators so high that employees are unable to meet them, resulting in significant wage cuts and forcing employees to resign voluntarily. This approach allows companies to avoid paying severance compensation (N+1) while legally downsizing their workforce. Behind this is the industry's transformation from a booming sector to a challenging one: restaurants lack the funds to purchase products, there is fierce competition from many peers, and regulatory policies have become stricter, leaving companies with no choice but to cut costs by reducing employee salaries.
The Trick of “Softly Pushing Employees Away”: Performance Reviews Become a “Voluntary Resignation Trap”
Many frontline employees suddenly see their wages reduced, not because of poor performance, but because the company sets unrealistic assessment targets. For example, Zhang Lei, who works in frozen food sales, was assigned a quarterly sales target 40% higher than last year, but with all the distributors' cold storage spaces already full, he couldn't meet it, leading to a zero performance rating and a wage cut from 8,000 yuan to 4,200 yuan. Others have experienced adjustments to their basic salaries, with a decrease in fixed portions and an increase in variable bonuses, yet the assessment criteria are so high that they are unattainable.
The company's intention is clear: it doesn't want to fire them outright; instead, it wants them to leave on their own. Since the company doesn't have to pay any compensation for voluntary resignations, if employees wait until they are laid off, they would be entitled to N+1 in severance pay based on their length of service. What's more infuriating is that this practice is legally permissible—the contract clearly states that employees can be dismissed for failing to meet performance targets, allowing the company to use performance reviews as a tool to get rid of them without leaving any obvious signs of layoffs in the financial records.
Companies' Anxiety About Profits: Revenue Increases, but Profits Don't
To understand why companies are so ruthless with their employees, look at the financial reports of three listed companies:
- Anjing Food: Revenue increased by 7% in 2025, but net profit decreased by 8%, and gross margin dropped to 21.6% (below the industry average). Since raw material costs (such as crayfish) and equipment depreciation are fixed, the only option is to cut labor costs—even research and development expenses have been reduced by cutting employee salaries.
- Qianwei Central Kitchen: Revenue remained virtually unchanged, but profit decreased by 24%, while sales expenses increased by 2.7 percentage points, eroding all profits.
- Huifa Food: The company suffered losses throughout the year, with executives frequently reducing their holdings in the company's stock.
The logic behind these companies is simple: with gross margins squeezed by price wars, the only flexible cost is labor. Therefore, statements like “promoting salary reforms” or “survival of the fittest” in annual reports actually mean using performance reviews to force employees out and pay them less.
The Prepared Meals Industry Turns from a Booming Sector to a Challenging One
Prepared meals were once a favorite of investors, with a market size expected to reach 770 billion yuan by 2025. However, in just two years, the industry has become a challenging one due to three main factors:
1. Restaurants Lack Funds to Purchase: The food service sector engaged in price wars in 2024, reducing average transaction prices significantly, forcing restaurant owners to lower their purchase prices for prepared meals.
2. Excessive Competition: New players from various industries have flooded the market, increasing the number of prepared meal companies to over 73,000. This has led to severe homogenization of low-end products. Some suppliers report that their gross margins have dropped to just 0.6%-0.8%, putting them at risk of bankruptcy.
3. Policy and Trust Issues: The education ministry has banned prepared meals in schools, new national standards require the use of non-preservative ingredients, and there are stricter regulations for dine-in and takeaway services, narrowing sales channels. Controversies involving figures like Luo Yonghao and Xibe have also damaged consumer trust.
Under these pressures, companies' profit margins are extremely narrow, leaving them with no other choice but to cut costs by reducing employee salaries.
Future Trends: Industry Consolidation and Difficulties for Employees
Economist Song Qinghui predicts that in five years, only about 500 out of the current 68,000 prepared meal companies may remain, with the top firms accounting for 80% of the market. Small companies will be eliminated, and larger ones will have to rely on cost-cutting measures to survive.
For employees, this practice of using performance reviews to force resignations is likely to become more common. They either have to accept lower wages or resign voluntarily, but with a poor industry environment, it's difficult to find new jobs. Companies may be able to maintain profits in the short term, but this could hinder their ability to retain talent and innovate, as research and development efforts are being compromised by salary cuts.
In summary, the challenges faced by the prepared meals industry ultimately fall on frontline employees.