Faster growth of self-operated chain restaurants

The market size of China's F&B industry has been growing steadily over the past few years, from RMB292.6 billion in 2014 to RMB467.21 billion in 2019, with a CAGR of 10.1% during this period. China's F&B industry has tremendous growth opportunities, with per capita food expenditure of approximately RMB16.4 per day in 2019, compared to RMB102.6 per day in the United States. Although China's F&B industry has been affected by the outbreak of the New Crown Pneumonia epidemic in 2020, the industry is expected to recover and continue to grow strongly with the rise in household spending, increased urbanization, strong growth in takeaway services and the development of digital platforms and technology in the Chinese market.

Restaurants in China can be categorized by business model as self-operated chain restaurants, franchises and non-chain restaurants. Self-operated chain restaurants are multiple restaurants operating under the same brand name in different locations and enjoying corporate ownership***. A franchise is a restaurant where the brand owner grants a franchise to a third-party operator for a fee or license fee, and the third-party operator has the right to use the restaurant brand and format. A non-franchise restaurant is a single stand-alone restaurant.

Self-operated chain restaurants are growing the fastest, at a CAGR of 12.3% from 2014 to 2019, primarily due to the fact that self-operated chain restaurant brands generally have a more robust capital position and higher brand awareness, and are better able to control food safety and provide quality food and service. However, the restaurant industry in China is at an early stage of development compared to the U.S. and other developed markets, and Chinese food is more difficult to standardize. As a result, the penetration rate of chain restaurants in China is low, especially in lower tier cities, with only approximately 332 chain restaurants per million people in 2019, compared to approximately 891 in the United States. This shows that there is huge room for chain restaurants to grow in China.The market for self-operated and franchised chain restaurants in China accounted for only 19.6% of China's F&B industry in 2019, much lower than the 73.8% in the United States.

China's restaurant industry can also be categorized into three segments by cuisine, namely Chinese food, Western food and other cuisine. The Chinese food market accounts for the largest share of China's F&B industry, with a market share of 79.4% in 2019. The market size of Chinese food increased from RMB2,386.3 billion in 2014 to RMB3,710.8 billion in 2019, at a CAGR of 9.2%. Western food is a rapidly growing segment, increasing from RMB388.9 billion in 2014 to RMB711.2 billion in 2019, at a CAGR of 12.8%.

Casual dining market share is increasing

The fast food segment is one of the fastest growing types of restaurant services in China's F&B industry, with huge room for development.In 2019, there will only be approximately 503 fast food restaurants for every one million people in China, as compared to approximately 1,035 restaurants in the United States. With the rapid growth of the fast food segment, its share in the overall food and beverage industry in China has been increasing, from approximately 21.5% in 2014 to approximately 22.9% in 2019,. The fast food segment increased from RMB622.8 billion in 2014 to RMB106.92 billion in 2019, driven by increasing urbanization and rising consumer demand for food safety and fast and convenient fast food.Western food accounted for 25.5% of the fast food market size in the PRC in 2019, while Chinese food accounted for 70.7%.

The casual dining segment was the fastest-growing type of restaurant services in China's food and beverage industry from 2014 to 2019, with its share of the overall market increasing from approximately 10.6% in 2014 to approximately 11.4 in 2019.Driven by the upgrading of consumption of China's population and the increased emphasis on high-quality dining experience, the casual dining segment market size increased from 2014 of RMB306.3 billion to RMB530.9 billion in 2019 In 2019, Western food accounted for 50.7% of the casual dining market size in China, while Chinese food had a 43.8% market share.

-- For more data, please refer to the Analytical Report on China's Catering Industry Development Outlook and Investment Forecast