Survey finds restaurant chains upbeat on revenue rebound

With the sizzling heat ushering in summer, major domestic restaurant chains are also showing hot recovery signs amid a rebound in diners' sentiment.

Over half of major domestic restaurant chain stores expect revenue to return to pre-pandemic levels this year, according to a joint survey of Chinese catering enterprises covering over two dozen listed companies and 51 restaurant brands.

Hotpot chains, Chinese fast-food chains and cuisines were the fastest recovering segments in the first quarter this year.

The latest joint survey by PwC and the China Chain Store & Franchise Association shows that most companies have yet to fully recover from the pandemic hits but have been actively expanding new product lines and scenarios in response to new market trends.

Quick move

"Despite the uncertainty that still lies ahead, restaurant chains that have experienced years of uncertainties and constantly-changing market environment would be able to move quickly to better leverage emerging opportunities," Jennifer Ye, PwC China's China Consumer Markets Leader, pointed out.

Weekend short-haul trips and gatherings as well as long vacations have contributed to the acceleration in recovery in the catering sector, the survey noted.

Financing deals were largely limited in 2022 and investors have favored emerging players in hot sectors such as coffee, tea drinks and Chinese fast food chains during the past year.

The number of large-size deals dropped significantly in 2022 and the total value of investment and acquisition deals in the catering sector sank to 9.12 billion yuan (US$1.28 billion) compared with 17.3 billion yuan in 2021.

Private equity and venture capital firms were the most active investors, paying special attention to Japanese-style restaurants, western catering chains and liquor vendors in addition to popular segments like coffee and fast food.

Investors are looking for new growth opportunities in niche segments, especially those in the early stages, and they are also favoring catering chain operators with relevant large size to seek relatively stable returns amid market uncertainty, the survey said.

Looking ahead, catering companies will focus more on differentiation in terms of pricing, product category, operation region, and seek organic growth by strengthening operation capability in order to be fully prepared for the strong catering market rebound.