Takeouts rejuvenate catering sector

Rising demand for takeout services is fueling a steady recovery of the catering industry in China, a new report said.

The Academy of China Council for the Promotion of International Trade said in a recent report that food takeouts are turning out to be the fastest recovering sector in the consumption industry. According to Swiss bank UBS, the takeout business on online food delivery platform Meituan Waimai has been quickly recovering, and its business volume will return to the pre-epidemic levels in the second quarter of the year.

Data from the National Bureau of Statistics showed that between January and April, the sales revenue of China's catering industry decreased by 41.2 percent on a yearly basis to 833.3 billion yuan ($117 billion). In April, the sales revenue was 230.7 billion yuan. Although the drop narrowed to 31.1 percent on a yearly basis, the downward pressure for the entire industry was still huge.

Zhao Ping, director of the international trade research department under the aegis of the CCPIT Academy, said: "The takeout sector has become a breakthrough point for restaurants to deal with the epidemic effect. Due to the epidemic, dine-in demand at restaurants has declined steeply, while the takeout business, on the contrary, has helped sustain business operations and cash flows."

According to the report, takeout services have helped promote the high-quality development of the catering sector by cultivating consumers' consumption habits and creating more business opportunities for the industry from the demand side. The survey conducted by the CCPIT Academy showed that 54.95 percent of the respondents increased their weekly catering expenditure because of takeout services.

The report showed that takeout services had a direct impact on the sales revenue and profit growth of the sector. According to the CCPIT Academy's survey, during the past three years, the contribution rate of takeout service to restaurants' sales revenue and profits has been increasing on a yearly basis. In 2019, takeout service contributed to 75 percent and 65 percent of the increment in total sales revenue and total profits of the catering industry, respectively.

The effect of takeout services in promoting the high-quality development of the catering sector is also embedded in its role in optimizing industrial ecology, accelerating industrial upgrade, and enhancing the industry's ability to handle uncertainties. During the epidemic, many restaurants started selling semifinished foods and raw materials through home delivery to maintain operations, said the report.

Li Mingtao, chief e-commerce analyst at China International Electronic Commerce Center, said that the rapid development of the takeout business has forced the industry to accelerate the process of upgrade, standardization and digitization.

During the epidemic, restaurants and food delivery platforms were combining efforts to overcome difficulties. Meituan Waimai launched a "spring breeze action". The action offered total subsidies of 400 million yuan to over 600,000 restaurants nationwide.

Data from Meituan Waimai showed that by May, 70 percent of the merchants had resumed over 60 percent of their takeout orders, and 30 percent of the merchants achieved even better sales in takeout services than the level before the epidemic.

Ren Xingzhou, research fellow and former director-general of the Institute for Market Economy under the Development Research Center of the State Council, said: "The epidemic has forced those restaurants without online takeout services to add the service, and those who already have the service to enhance the sector. However, online and offline businesses involve two different mindsets. Food enterprises should get accustomed to the online business mode and adjust their business strategies to promote online and offline business integration."