, China

Consumer confidence rebound to boost China's foodservice sector

Chain operators are expected to grow at a higher rate across all channels.

The rebound in consumer confidence in the coming years is expected to drive growth in China’s foodservice sector, which is set to grow at a five-year compound annual growth rate (CAGR) of 2.6% to $1.09t (CNY6.96t) in 2026, according to GlobalData.

GlobalData expects all foodservice profit sector channels in China to experience growth in outlet count over the same period. Chain operators will grow at a higher rate compared to independent operators across restaurant channels, the report stated.

The foodservice profit sector revenue grew at a CAGR of 3.3% from 2016 to 2021, led by the growing number of transactions and outlets, GlobalData said. The report attributed home delivery and take-away sales to provide support to the sector in 2021 to revive from the blow received during the COVID-19 pandemic.

READ MORE: China retains lead as global e-commerce leader: report

Full-service restaurants (FSR) remained the largest foodservice profit sector channel in 2021, the report stated. Accounting for 67.1% of China’s total profit sector revenue in 2021, the channel grew at a CAGR of 3.6% during 2016-21, driven solely by delivery and take-away sales.

Yum! Brands (Yum China Holdings) was the leading FSR operator in 2021 with around 2,500 outlets, the report added.

“The outbreak of the Delta variant of COVID-19 led to the implementation of strict public restrictions, including the closures of many tourist locations. Thus, operators turned to delivery, take-away, and drive-thru services in 2021 to survive another round of partial closures and restrictions,” Nath said.

The leisure and travel channels recorded negative CAGRs of 3.4% and 2.2%, respectively, from 2016 to 2021, due to a severe drop in the number of international tourists amidst periods of lockdown in the country, the report added.

A growing inclination towards healthy food options made with fresh and local ingredients is expected to be on the rise in channels such as quick service restaurants (QSR) and FSRs.

“As a result, operators need to constantly innovate their menus with health-focused and quality dishes. The key target demographics for healthy indulgence will be the youth and millennials in China,” said Srimoyee Nath, consumer analyst at GlobalData.

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