Total Issue 3899
Author | Restaurant boss internal reference internal ginseng Jun
Again! Catering bigwigs
Competing to increase the "price reduction tide"
The price war continues.
Recently, the village base, which has just announced the opening of the franchise, has made a blockbuster move, announcing that the price of its stores is back to 2008! The price reduction is about 19%-25%! ”。
"Sichuan-style fried chicken rice", "Kung Pao chicken rice", "ginger fried duck rice" and "mushroom slippery chicken rice" 4 products have been reduced in price, ranging from 3-4 yuan. After the price reduction, a bowl of Kung Pao Chicken Rice is only 11.99 yuan at the lowest.
It's not just the village base that is in a hurry to reduce prices. Taking advantage of the 10th anniversary, Young Master Xi launched the "9.9 every day" activity: after 3 p.m. every day, the dine-in price of freshly grilled lamb skewers (5 skewers), freshly roasted snowflake beef skewers (8 skewers), shredded chicken cold noodles and classic oily noodles (somen noodles) is only 9 yuan 9.
After Xibei's sub-brand "Jia Guolong Small Pot Beef" was changed to "Xibei Veal Braised Rice and Mixed Noodles", a significant change was that the unit price of customers was further reduced, from 80 yuan to 50 yuan.
Its main products are classic rice bowls such as potato and carrot beef stewed rice, Thai curry beef stewed rice, as well as spicy beef noodles, etc., with online set prices ranging from 35.9 to 38.9 yuan.
Recently, Hefu Lao Mian announced: the price of the product has dropped by about 32%, such as the original price of 35 yuan of herbal bone broth cartilage noodles is now 29 yuan, and if the membership is opened, the price of each serving of dine-in is 25.5 yuan. Compared with the previous price of 35 yuan +, the price band of mainstream products of 16~29 yuan is undoubtedly more likely to be favored by workers.
It is worth noting that the price reduction of Hefu Lao Mian this time also emphasizes its "high quality and parity" and "only price reduction without quality reduction".
This is related to the current market trend and consumer sentiment. With the escalation of the "price reduction tide", many consumers are happy to see it, but also worried: after the price reduction, will the amount of dishes be reduced in disguise? Will the method and materials be quietly discounted?
Passenger flow decreases, revenue declines...
Price reductions can backfire!
For restaurants, the number of customers directly affects the profit income. Faced with the chronic disease that new customers are difficult to find and old diners are difficult to stay, bosses will naturally think of the "fierce medicine" of "price reduction". Generally speaking, the effect of price reduction is also very significant.
For example, Hefu Lao Mian, it is undeniable that it has been favored by capital for many years, but in a consumption environment that is becoming more and more cost-effective, the word "expensive" is the basic impression of consumers on Hefu Lao Mian, from 2020 to 2022, Hefu Lao Mian continued to lose money, losing 700 million yuan in three years.
In 2023, Hefu Lao Mian will adjust the menu and price many times, and the proportion of products of 20~30 yuan will increase. After the price adjustment, the brand scale continued to grow. According to the 21st Century Business Herald, by the end of 2023, its membership has doubled year-on-year, with more than 20 million members, and sales have increased by more than 50% year-on-year.
With the decline in the average order value, the year-on-year increase in passenger flow is evident. However, if the price is reduced blindly regardless of the lesion, this fierce drug will not only fail to save the market, but may even bring a "critical illness notice" to the brand.
To put it simply, price reductions won't solve all problems.
First of all, a prolonged price war may have an impact on the price anchor of consumers' psychology. For diners, the reason behind the price war is not important, what matters is whether the price of the product in hand meets their psychological expectations.
When the market is guided by price war for a long time, it is inevitable that consumers will have the psychological expectation that "this product is only worth this price". For example, in the current beverage industry, regardless of the actual cost of a cup of coffee, 9.9 yuan has become the competitive price standard in the industry. "You can buy expensive, you can't buy expensive", when the product is equated with low prices in the hearts of consumers, it is difficult to change it.
In addition, lower prices may blur the brand customer base, but cause the loss of target customers. Nei Sanjun once learned from the insiders of a well-known fast food known as the "light of migrant workers" that one of the stores originally focused on young people, but due to the reduction of the unit price, parents with children and the elderly around the restaurant became frequent customers of the restaurant.
And what kind of customer group are the elderly? I like low prices and affordable, but the speed of eating is very slow, maybe young people can eat for half an hour, and the elderly can sit for a morning or afternoon, which is destined to be inefficient, and fast food wants to turn over the table. It is reported that after the transformation into a "canteen for the elderly", the store's single-store turnover fell from 3.5w to 3w, and its profitability decreased significantly.
Therefore, price reductions do have a short-term effect and can attract more price-sensitive customers, and for restaurants, whether to join the price war needs to be extra cautious.
Especially for fast-food brands, which are inherently dependent on high customer turnovers, it is important to ensure that the loss of core customers (such as young office workers) does not lead to a significant drop in turnover. For example, by launching packages or limited-time offers at different price points, customers with different spending power can be attracted without completely changing the customer group structure.
At the end of the "price war" is the "value war"
"Price reduction without quality reduction" is not just a declaration of a brand of Hefu Lao Mein, but the general trend in the second half of the catering "price reduction tide".
Recently, Starbucks "married" Hilton, which sparked heated discussions. It is reported that Starbucks and Hilton, a world-renowned hotel chain group, can join each other's members through their respective apps and other channels to enjoy relevant special benefits.
In this regard, netizens shouted: "I have broken the circle of life by drinking Starbucks!" ”
Starbucks' core goal is clear: to expand core members, attract new members, and retain old members.
As of the end of the first quarter of this year, Starbucks China had more than 127 million members, of which 21 million were 90-day active members. In the second quarter of fiscal 2024, Starbucks' sales from members continued to grow, accounting for 75%.
Previously, the wind of #星巴克也急了# and #9.9 finally swept into Starbucks# and other Weibo hot searches, which made many people feel Starbucks' anxiety, and the move of co-branding with Hilton made Starbucks successfully enter the next level in the coffee price war.
It not only attracted new customers with price reduction, but also strongly proved that its "high-end positioning will not change".
Coffee, as one of the earliest and most fierce tracks in the catering "price war", Starbucks' move has a certain enlightenment. Just as in the past year or two, the price war in the new energy vehicle industry has become more and more fierce, Huawei's Yu Chengdong expressed his opinion that we should roll the value, not the price.
From a longer-term perspective in the future, in addition to the price of rolls, China's coffee market cannot be without the value of rolls, and the competition in the catering industry is ultimately all about volume value, and will accelerate into the value war.
An important market law is: "Consumption can be downgraded, but the consumption track is always a process of continuous upgrading".
Even in a highly competitive price environment, brands still need to innovate and upgrade to meet the growing needs of consumers. Price reduction is only part of the marketing strategy, and the continuous improvement of products and services is the foundation of the long-term development of the brand.
By balancing short-term interests and long-term strategies, doing a good job in excellent quality, reasonable prices, high-quality services, differentiated market competition, etc., brands can maintain their advantages in the fierce market competition and win the lasting trust of consumers.