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    Current status of China's catering industry


    In 2012, A Bite of China, a fascinating documentary, not only opened the appetite of diners and attracted the audience to fully enjoy and recollect the culture and affection embedded in delicious food, but also drove huge economic benefits for food and catering industry. Chinese food culture boasts a long standing of history. At present, the catering market in China is characterized with considerable capacity and rapid growth; however, it also takes on a low level of industry concentration and is in the start-up of aligning with capital market.
    Steady and rapid growth, with market capacity far from saturation
    Along with the economic development, accelerated urbanization process and the change of household consumption habits, people's demand for catering industry is increasingly growing. In
    2011, China's catering industry achieved the revenue of RMB 2 trillion, accounting for 11.3% of the total retail sales of social consumer goods. According to data of National Bureau of Statistics, during the five years from 2007 to 2011, the revenue of catering industry has maintained a steady annual growth of about 14%. Even in 2009 when financial crisis prevailed, the retail sales of that year still reached RMB1.8 trillion, presenting a yearly growth of 16.8%. The above facts indicate that catering industry has the resistance against the economic cycle, and it is always a strong force to underpin the social consumer goods retailing in China, with a rapid and steady growth. Against this background, more and more investors choose to return to traditional industries and invest in catering sector. 
    Low market concentration presents tremendous consolidation opportunities
    Compared with the huge market, the catering industry has relatively lower market concentration. According to the latest statistics of Analysis of China's Top 100 Restaurants 2011 released by the China Cuisine Association, sales of the top 100 catering enterprises of the year totaled about RMB 158.6 billion, only accounting for 7.7% of the total industry sales. In 2010, sales of catering enterprises with annual sales above RMB 2 million only accounted for 18% of the total industry sales, while in the United States, Britain, Germany and other developed countries, annual sales of the top 10 catering enterprises accounted for about 25% of the total industry sales. Many foreign catering giants have realized multi-brand and multi-format expansion through M&A to meet with demands of customers from various market segments, and thus become bigger and stronger. With relatively lower concentration, China's catering industry is dominated by SMEs which has low efficiency in internal management and operation. With rising labor cost, rent and food price, the time of maintaining high profits by relying on low cost will never come back again, while higher tax and government's intensified supervision on food safety will further weaken the profitability of catering enterprises. Many SMEs are facing challenges for survival and the whole industry has huge space for integration. Brand catering enterprises will have double growth opportunities created by industry growth and market share enhancement.