The catering industry itself is characterized by high cost and low profit. The profit rate of Yum! China, which operates standardized fast food, is about 21%, while that of Xiaonanguo and Quanjude, which are less than 3% and have relatively low marginal costs, is about 11%. These companies with such profit margins are relatively benchmark enterprises, and the profit margins of the next few echelons will be lower. Lower profit means longer capital return period, which is a great challenge to the sustainability of catering enterprises. Because the overall catering market has a large capacity but fierce competition, it is the basic status quo to differentiate into single products. Whether catering enterprises can survive continuously depends on whether they can change from monopoly brands to monopoly categories. However, even if a certain category can be monopolized, the sustainability of the enterprise will still be challenged by the change of consumer choice because of the increasingly diversified choices of consumers.

These are the difficulties that the founders of catering enterprises should be psychologically prepared before starting a business. When these difficulties are extended, there are a series of problems.

judging from the core of catering products, the catering market is a completely competitive market. The characteristics of complete competition mean that no enterprise in the market can obtain monopoly profits, which determines the ceiling of catering enterprise profits.

the apparent reason why the catering industry is a completely competitive market is the low entry threshold, but the reason cannot be simply summarized as the low entry threshold. For example, in the early years, the entry threshold of the Internet industry was also very low, but the Internet was a typical imperfect competitive market. Moreover, after the development of commercial real estate in golden decade, the proportion of catering industry in shopping malls has increased from 31% to 61%. The dividend period of commercial real estate has come to an end, and the cost of rent and labor is increasing day by day. If street shops are excluded, the entry threshold of catering industry is not low.

one of the more important reasons why the catering industry is caught in complete competition is that the industry participants are highly substitutable, and this substitutability spans all segments. In essence, the business logic of catering is to provide diners with products and services based on ingredients by renting a certain space. The core of the product is to provide satiety. It is ridiculous to compare "spread some meat on the big cake" with pizza, but it is the closest explanation to the first principle. Pizza Express is not only a substitute for Pizza Hut and Le Caesar, which are both the main pizzas, but also a substitute for McDonald's and Burger King, and even a substitute for Haidilao and Xiabu Xiabu. For an extreme example, a Michelin-starred restaurant will never think that it is in the same market as Shaxian snacks, but in fact, the existence of Shaxian snacks will substantially change the consumption frequency and lower the ceiling of this Michelin-starred restaurant.

in a certain domestic demand market, perfect competition determines the upper limit of the catering industry-although this is a ceiling that most catering enterprises can't touch. In the previous period, perfect competition was also one of the factors of low-cost competition in the previous period, but the historical factors of specific development stages played a more critical role in it. In the early days of the reform, the per capita income gradually rose, and the population agglomeration effect took shape, followed by the emergence of new cuisines (such as "foreign fast food", "western food" and various local cuisines in coastal cities). In the incremental market, catering enterprises also had the opportunity to seize the market by simply copying, which caused the phenomenon of homogenization. Homogeneity means further reducing the premium space under perfect competition. The income level of diners also reduces the upper limit of premium space, and enterprises can only expand profits by cutting costs. This is a historical factor in a specific period in the past.

However, the new period is characterized by the stock market, and the model in copycat, a first-and second-tier city, is no longer feasible. With the further gathering of population, the further increase of diners' income and the upgrading of consumption concept, the catering formats have also split and merged, and started to operate differently. For example, Japanese cuisine, the Japanese restaurant in our impression has gradually subdivided into various formats, and various izakaya, Japanese hot pot, Japanese topic and Huaishi cuisine have appeared in the market one after another. The basis for diners to choose restaurants has also developed from cuisines to single products and catering brands. Under the condition that the essence of perfect competition has not changed, the market has been subdivided, and the market that can be exchanged for low-cost competition strategy has been squeezed out.

if the total profit value (v) created by a catering enterprise based on a first-tier city is expressed as the product of the customer life cycle value (LTV) and the number of customers covered (q), and the customer life cycle value is further expressed as the customer's single consumption profit (p) and consumption frequency (t), it can be concluded that the total profit value that the enterprise can create is v = p * t * q. In the case that the population of first-tier cities tends to be stable or even squeezed out, with the market segmentation, the number Q covering customers will be diverted, so improving the profit P generated by single consumption and the consumption frequency T are two key points to solve the low profit. Therefore, catering enterprises are trying their best to increase the unit price and repurchase rate of customers, and at the same time, they are trying to reach upstream to reduce the cost of raw materials and save labor costs by using IT and Internet tools. Personally, I think the repurchase rate is the most important indicator, because it reflects the influence of catering brands, and it is also the leading indicator of these indicators, such as turnover rate and floor efficiency.

there are many ways to improve the repurchase rate, and in the final analysis, it is to return to the brand. Brands are not only trademarks managed by the Trademark Office, but also dazzling non-effect advertisements in various media and the money owners behind them. As the inner part of glamorous appearance, brand is an external shell supported by a series of technologies, products and services, and it is the company's monopoly on these technologies, products and services. Monopoly brand is the easiest monopoly for a catering enterprise-just pay for a trademark agent, but ambitious catering enterprises will try to "monopolize" the category. Because "monopolizing" a category means "monopolizing" a market segment dominated by categories, occupying the diners' minds about this category with brands and setting an alarm clock in their hearts. When diners want to eat pickled fish, they think of Tai Er. If they want to eat roasted ribs, they will eat fat. If they want to drink tea, they will drink tea. That is the alarm clock of the brand in the diners' minds, which will wake them up for re-purchase.

However, as mentioned earlier, any catering brand is inevitably exposed to complete competition, even if it successfully "monopolizes" a certain category. In the world, there is no need to eat roasted ribs, and there is no irreplaceable added value, only three meals that must be solved. And catering enterprises must face the problem of the sustainability of profits. In the complete competition, no catering enterprise can guarantee that it can continuously launch products that meet the tastes of diners, especially in the era when the brand broke out rapidly but disappeared rapidly. Therefore, more and more catering enterprises have embarked on the path of strategic investment.