Total No. 3925
Author | Restaurant boss internal reference Cai Daqi
Selling burgers across borders
Zhengxin, DQ, and Pizza Hut are all here
It's been a long time since the burger category has been so lively.
Recently, Zhengxin Chicken Steak began to vigorously promote chicken burgers, Wednesday Burger Day, three chicken steak burgers only 9.9 yuan, and the cost performance is directly full. This new staple food has undoubtedly enriched the dining scene of Zhengxin chicken steak and increased the unit price.
Previously, it was a big crossover of DQ ice cream.
On July 10, DQ Ice Cream opened its first DQ burger store in Shanghai, located near Nanjing West Road in Shanghai. The main burger product is Angus beef burger, which is available in many versions such as classic, signature queen, smoked bacon, avocado, etc., as well as the gimmicky Shanghai spicy soy sauce flavor Angus beef burger, which is limited to the city and is very integrated.
The huge poster at the door shows the selling point of the product, 100% grain-fed Angus beef imported from Australia, so the overall price of the burger is more than 39 yuan, and the highest can reach 67 yuan.
In the face of the decline in the unit price of the entire catering market, Xu Weilian, CEO of CFB Group, once mentioned in an interview that hamburg has the particularity of the catering track, and the public acceptance in the Chinese market is high enough, and the market potential is still being released. Due to the high quality standards of the supply chain and raw materials, the group chooses to take the route of medium price.
This positioning seems to be very similar to brands such as Shake Shack and Five Guys.
The earlier crossover at the Hamburg circuit was Pizza Hut.
As early as April, Pizza Hut launched a new "Pizza Burger" in 2,000 stores across the country, with Western-grade large pieces of meat paired with Pizza Hut's unique "Pizza Bread", baked to order, starting at 19.9 yuan, and the top cheese Wagyu Beef Supreme Burger is only 32 yuan.
In May, Pizza Hut also co-branded with Fat Shrimp Village to launch Fat Crayfish Chicken Leg Burger to further strengthen the consumer mentality construction of "Pizza Burger".
This extremely lively "hamburg" crossover tide seems to be as the CEO of CFB Group talked about, the market potential is constantly being released. But is that really the case?
Store closures, stalls, declining profits
It's not going to be a good time for boutique burgers!
As a very mature category, the price range of burgers is very clear, let's divide DQ burgers and Shake Shack and Five Guys into one category, that is, mid-to-high-end burgers or boutique burgers, and McDonald's, KFC, Pizza Hut in the new pizza burger and Chinese burgers represented by Tustin into one category, that is, affordable burgers or mass burgers, and discuss them separately.
After the opening of the first DQ burger store, two new stores are already in the pipeline. But looking back at the burger brands in this price range, they closed stores, stalled, and even declined in performance, like the baking industry, began to decline......
In April, all the stores of Habitt Burger in Shanghai were "closed", which is known as "the healthiest, greenest and most delicious burger in the United States" and "Hermes of the burger industry", came to China in 2017, and at its peak, it opened 7 stores in Shanghai and expanded to Hangzhou and Chongqing.
Shake Shack, which is very similar to DQ's burger positioning, debuted at the pinnacle, queued for 7 hours, and has now expanded to more than 40 stores. It seems to be smooth sailing, but in fact, the pressure is doubled.
The brand's financial report for the third quarter of 2023 mentioned that although revenue has increased year-on-year, the development trend of the Chinese market has continued to slow down since August, and a variety of macro factors are superimposed, and it is expected that short-term pressure may continue until next year (2024).
The continued slowdown in market development is one thing, and the increasing price sensitivity of consumers is another key factor. "Whether it is worth the money and whether it is expensive for a reason", the high price has become the most concentrated question point for consumers.
In such an environment, the development of boutique burgers may not be smooth, and the low repurchase rate is its biggest obstacle.
It's a little regrettable that the opening of the first DQ burger did not enjoy the "Internet celebrity bonus" like Shake Shack.
Once Shake Shack opened, the queue was at least 1.5 hours, scalpers waited for the opportunity, and the errand fee for purchasing started at 100 yuan, and when it came to DQ Burger, it was just a bland "long queue". With no opening bonus and an uncertain future, DQ suddenly broke into the subdivision of boutique burgers, and the prospects were slightly worrisome.
McCann fights
A burger costs only 9.9 yuan!
When it comes to burgers, whether it's a DQ burger or a Shake Shack, the price benchmark in consumers' minds is always KFC or McDonald's. Returning to the Volkswagen burger, it is not difficult to find that the life of each family is not easy, the low price trend of 9.9 yuan is surging, and the threat of Chinese burgers is still there.
In the first half of 2024, a very intuitive feeling is that burgers are getting cheaper and cheaper, and there are more and more marketing activities for brands such as McDonald's and KFC.
McDonald's has a 13.9 yuan "poor ghost package", a hamburger + a drink, no more than 15 yuan, which is the favorite of countless workers. McDonald's also issued a 10 yuan hamburger coupon, a grilled chicken leg burger and a McSpicy chicken leg burger, which cost only 10 yuan; A meal for two at 29.9 yuan, including a grilled chicken thigh burger, a bacon double burger, and two drinks......
KFC has staple food to choose from, 5.2% off, only 19.9 yuan to get it, a hamburger + a hot and spicy bone chicken + a drink. Roughly calculated, although a hamburger does not reach the super cost performance of Zhengxin chicken steak, it is basically about 10 yuan, which is already very attractive.
Not only burgers, but also on the group buying platform, the McCann two have more than 40 group purchase packages, from breakfast to lunch to supper. From the perspective of consumers' "experience", this price war has been in full swing and protracted.
Yum China's Q1 2024 financial results report showed that KFC's restaurant profit margin was 19.3%, down 1.9 percentage points year-on-year. The report also specifically mentioned that the reason for the decline was the addition of cost-effective products, such as the KFC version of the "poor ghost package" - OK three-piece set, gold SPA chicken steak burger + medium fries + cola, only 19.9 yuan.
Yum China's chief executive, Qu Cuirong, has mentioned that the competitive situation in China's fast-food industry would not be called a price war, but as the group further penetrates into other cities in the mainland and the market becomes more popular, the group needs to offer customers products at more affordable prices.
But such a low-price strategy relies on effective cost management. For example, KCOFFEE in the coffee sector, as low as 9.9 yuan, sold 190 million cups of coffee in 2023. Wat mentioned that the resilience of the brand can be strengthened by strategically adjusting the cost structure and turning traditional fixed costs into variable costs.
On the surface, it is a price battle, but in fact, it is a competition for cost control. In the battle between light and dark, there are already categories that have fallen behind, such as Burger King.
In May, LeTV announced that it would invest up to 100 million yuan over three years to fund Burger King to open a new restaurant in Chinese mainland. Burger King responded that it only invested in one of its multi-store franchisees and did not cooperate directly.
This investment has allowed LETV to quickly enter the fast food business and expand its business scope, but many people in the industry are slightly pessimistic about the "benefits" that this investment can bring.
Although in the global perspective, Burger King has 10,000 stores, ranking in the first echelon. But in the Chinese market, Burger King has never been able to walk side by side with McCann.
In terms of the number of new stores in recent years, KFC has more than 1,000, and in 2023 it will reach 1,920, McDonald's will have more than 700, and Burger King's high point will be 255 in 2023. Whether it is the volume or the speed of opening a store, it is not an order of magnitude.
In the hard-hitting price war, although there are also special activities such as two crispy chicken burgers of 9.9 yuan, the early positioning such as Shake Shack, locking the mid-to-high-end market of Burger King, its core products are still more than 30 yuan products, such as Angus Cattle Burger.
This has put Burger King into an embarrassing competitive situation, in terms of mental construction, it can't beat KFC and McDonald's, compared to price, it can't beat Wallace and other sinking brands.
Also left behind is fried chicken burger brand Popeyes. In July, RBI took back the Chinese business of fried chicken brand Popeyes from Tims China for $15 million. Tims China and Popeyes China business, "flash marriage", and "flash separation".
The reason for the "relationship breakdown" is very simple, Popeyes, which has a per capita consumption of 40~50 yuan, is just in the most sensitive price band of consumers, and the speed of opening stores is slowing down, and it is inevitable that profits will decline.
In this protracted price war, McDonald's has long-term experience in operating low-cost products, KFC has faster product innovation capabilities and rich marketing experience, and both have strong cost control capabilities. In this way, the other price band of the hamburger category is also difficult.
To sink
There are also more local "roadblocks"
In addition, there are Chinese burger brands such as Tustin in this category, which are strongly "stealing" the route of new brands (and Wallace, of course).
Tustin, which has been "soaring" for a year, will open 3,772 stores in 2023, and although the number of stores will decrease slightly in 2024, it will still open more than 800 stores, with a total of more than 7,500 stores. In terms of the distribution of stores in cities, second-tier cities account for about one-fifth, and third- and fourth-tier cities account for more than 40%, which is very sinking.
More and more small towns and villages are popping up Tustin signs, or Chinese burger brands that resemble them. The friendly taste advantage, the cost-effective price advantage, and the preconceived mental advantage are undoubtedly the "roadblocks" for the brand to take the sinking route.
From the development of different price bands to the brand pattern of different cities, it is not difficult to see that the pattern of the hamburger category is stable, and more powerful momentum is needed to break through the obstacles of "Mackentosh" in order to impact and cross borders.
If you are like Pizza Hut or Zhengxin Chicken Steak, you only need to use burgers as a product supplement, you only need to make good products, innovate from time to time, or more new explosive products will be born. However, if you want to dig deep like DQ Burger, especially the small track of "expensive" burger, the cost of betting is higher, and the road is long and difficult.