Summary of Key Points
Recently, an industry with particularly attractive profits has attracted two types of players to enter the market: one consists of established local brands (such as Jinlimen, Yili, and Jiduquan), which are rapidly expanding through direct operations and franchising; the other includes leading companies from the food service sector (like Juwei, Chayanyuese, and Haidilao) that are making a successful foray into this business. Although the news does not specify the exact industry, based on the types of participants, it is likely to be in the realm of prepared meals, ready-to-eat foods, or the retailization of dining services—products that are both convenient and tasty.
Detailed Analysis
Why Is This Industry So Profitable?
The main reasons why this industry is so attractive are its high demand and low costs:
- Demand Side: Young people are busy with work and don’t want to cook, or they prefer to enjoy the taste of restaurant-quality food at home. Prepared meals and ready-to-eat foods meet these needs—they can be heated up in minutes, are cheaper than takeout, and save time.
- Cost Side: Businesses can produce these products in large quantities (for example, by preparing them in central kitchens and freezing them), eliminating the need to hire many chefs or rent large kitchens, which significantly reduces labor and space costs. Selling these products requires only simple heating, leaving a substantial profit margin.
Expansion Strategies of Local Brands
These regional brands already have a good reputation but operate on a smaller scale. To quickly expand nationwide, they are using two approaches:
- Direct Operations: They invest in opening their own stores, such as flagship locations in bustling urban areas, to maintain strict control over product quality and brand image.
- Franchising: They allow others to invest and open stores under their brand name and using their supply chain. For instance, if Yili launches prepared meals, franchisees can simply purchase the products from the headquarters and sell them without having to develop their own production processes, allowing for rapid expansion across cities and even smaller towns.
The Advantages of Food Service Giants Entering the Market
Giants like Juwei and Chayanyuese have inherent advantages when entering this industry:
- Juwei: With a well-established braised meat supply chain, they can easily transition to other convenience foods (such as pre-made braised meat dishes) using their existing production and distribution networks, reducing costs and effort.
- Chayanyuese: With millions of followers, launching ready-to-eat bubble tea or snacks means customers will buy them automatically, providing a natural source of traffic without the need for expensive advertising.
- Haidilao: Their central kitchens are highly efficient, and their expertise in preparing ingredients for hot pot and other dishes makes their pre-made products (such as hot pot bases and semi-finished ingredients) very popular.
What Do Consumers Gain—and What Should They Be Cautious About?
For consumers, the benefits include more choices, such as being able to enjoy Haidilao’s hot pot or Chayanyuese’s bubble tea at home at a potentially lower price. However, there are some concerns:
- Quality Control in Franchise Stores: With numerous franchises, some owners may cut corners to save costs, using less fresh ingredients that can affect the quality and safety of the products.
- Quality of Cross-Business Products: Giants might not devote as much effort to these cross-business products as they do to their main offerings, so the quality of these items may be subpar. It’s advisable to read reviews before making purchases.
What Will Happen in the Future?
Competition is likely to intensify as more players realize the high profits. Prices will probably drop (e.g., from 10 yuan to 8 yuan), and companies will focus on innovation, such as developing healthier or more distinctive products. Profits may gradually decrease, and any brand that experiences quality issues could quickly lose customers. Therefore, both established brands and giants must prioritize quality control to maintain their success.
Overall, this industry is in a period of rapid growth, but the excitement also comes with risks. For consumers, it means more choices; for businesses, it presents both opportunities and challenges.