The race to win over single customers.

Along with rapid demographic and economic changes, Chinese consumer behavior is also undergoing significant transformations. In particular, the rise of single people has created a new and promising market for the Food and Beverage (F&B) industry, forcing industry giants to adjust their business strategies to meet the needs of this customer group.

Pizza Hut and KFC restaurants in China. (Source: CNBC)

It's not hard to notice the shift in business strategies of the big players in China's F&B industry. Yum China, the company that operates major fast-food chains like Pizza Hut and KFC in China, launched its Pizza Hut Wow concept last May, focusing on smaller pizzas—half the size of regular Pizza Hut pizzas—priced at just 19 RMB (US$2.70). This smaller portion size allows customers to enjoy more of the food, even when dining alone.

A spokesperson for Yum China said the company is targeting small households – a growing customer segment. Yum China has converted over 100 of its 3,500 Pizza Hut stores in China to the Wow model and aims to double that number by the end of the year. The spokesperson added that so far, the new model has exceeded expectations.

Not only Yum China, but the Yi Wei hotpot restaurant chain has also quickly changed its strategy to cater to solo diners and small families. Yi Wei has launched a unique conveyor belt hotpot model. Each person is served a small hotpot with a sufficient portion of meat, along with a conveyor belt system offering a variety of dipping ingredients. Launched last August, Yi Wei currently has around 50 restaurants of this type in major cities and plans to open an additional 200 restaurants by 2026.

This trend is not accidental; it reflects the rapid demographic changes in the country of over a billion people. According to 2020 statistics, China has 125 million single-person households, more than double the number from 10 years earlier. The percentage of single-person households in total households increased from 14.5% to 25.4% during the same period.

Jason Yu, CEO of consulting firm Kantar, said that previously there weren't many products and services for single-person households, but more and more brands are realizing that this is a potential market for this new business model.

The increasing proportion of single-person households is also impacting the online food delivery industry. Restaurants on major apps like Meituan are now promoting combo meals for solo customers. As of June, approximately 1.52 million food vendors on Meituan were offering small-portion meals, an 11% increase year-to-date. The total number of such meals increased by 7% to 8.32 million.

Meituan, the company that operates the app, said that smaller portions are also part of a trend toward reducing food waste and eating healthily.

Furthermore, the economic slowdown has led consumers to tighten their belts and opt for simpler, more economical meals. Statistics show that sales at Chinese restaurants increased by only 3% in July compared to the same period last year, the lowest growth rate since China lifted COVID-19-related restrictions in December 2022.

In this context, a business model targeting solo diners offers a suitable solution for both restaurants and customers. However, the challenge for restaurants is how to balance attracting solo diners—who are very price-sensitive—with ensuring business profitability.

Source: https://baoquocte.vn/thi-truong-am-thuc-trung-quoc-cuoc-dua-gianh-khach-hang-doc-than-293244.html