whale interview| Xibei Jia Guolong: Get rid of the fantasy of fast food and put on “emotional value”

Photo source: Visual China

Blue Whale News, February 27 (Reporter Zhang Jinglun)Since 2024, under the multiple pressures of consumption downgrade, high costs and competition, China’s catering industry has been quietly unfolding among leading companies.

Xibei is quietly launching a new change: Xibei Catering founder Jia Guolong regained control of the CEO scepter, and then immediately embarked on a number of revitalization measures: the brand logo was streamlined from Xibei Yaomian Village to Xibei XIBEI, and some stores in Beijing and Shanghai launched roast duck products, while the brand focused on the positioning of Huanju Restaurant.

One of the labels that the outside world used to regard Jia Guolong was “trouble”. Jia Guolong has never stopped exploring innovative business models and consumption scenarios. Nine years later, after Jia Guolong returned to his post as CEO of Xibei, he immediately embarked on a number of revitalization measures, triggering multiple speculations in the industry about the catering giant.

When focusing on strategy and extreme cost performance have become high-frequency words, how can this leading catering company find a balance between adhering to quality and adapting to consumption downgrades? Faced with questioning that the expansion of sub-brands did not meet expectations, how did Jia Guolong deconstruct the business logic of innovation and trial and error? Blue Whale journalist talked to Jia Guolong to decode the catering veteran’s logic of breaking the game in the industry’s winter.

Return and contraction under the cold winter

Some data in 2024 shocked many catering owners.

Data from the Beijing City Bureau of Statistics show that in 2024, Beijing’s catering industry achieved revenue of 127.39 billion yuan, a year-on-year decrease of 4.9%. Looking at Shanghai, which is also a key consumer city, data from the Shanghai City Bureau of Statistics shows that in 2024, the retail sales of the accommodation and catering industry will be 142.353 billion yuan, a year-on-year decrease of 5.4%.

“As winter approaches, Xibei will not be spared either.

At the beginning of 2024, Jia Guolong announced Xibei’s 2023 results: revenue exceeded 6.2 billion yuan, a record high. While Jia Guolong was full of hope for 2024, reality poured cold water on it.

Jia Guolong told Blue Whale News that when we held our annual meeting in early 2024, we expected an increase of at least 10% in 2024. As a result, after the Spring Festival, performance began to decline. This was particularly touching and stimulating to me. The catering industry is originally a low-profit industry. If revenue drops, profits will basically disappear. This is very scary. rdquo;

After 37 years in catering, he began to clearly feel the chill. This is the first time he has encountered such a drastic business decline.” rdquo;

When Jia Guolong inspected the store, he found that the passenger flow had decreased significantly. ldquo; It turns out that from Monday to Friday, there are fewer people at least at noon and full at night. But now there are very few people at noon, and they are not enough to sit down at night. July and August were originally the peak season, but last year’s performance was not as good as the same period in 2023.& rdquo;

From the perspective of leading companies, in addition to Xibei, the performance of listed catering companies such as Haidilao, Xiabu Xiabu and Jiumao Jiu is not optimistic. In the first half of 2024, the net profit of Haidilao decreased by 9.7%, the net profit of sipping and sipping turned from profit to loss, with a loss of 273 million yuan, and the net profit of 99 cents dropped by 67%. It is worth mentioning that both Jiumao Jiujiu and Xiabu Xiabu attributed the decline in performance to the severe external environment.

Jia Guolong felt that the crisis in Xibei had really arrived. So, he regained the CEO scepter.

Jia Guolong judged that the catering industry is currently facing a crisis of oversupply and insufficient demand. ldquo; In 2024, the main thing is to subtract, and we will continue to subtract, subtract what should be reduced, and make what remains better.” rdquo;

The cash flow of some stores became negative, and Jia Guolong decisively chose to close them. ldquo; In fact, some of them have nothing to do with store operations. A better store suddenly opened next to the mall that was originally doing a good business, taking away all the customer flow. No matter how hard the stores in the mall tried, it was useless.” rdquo; He revealed to Blue Whale News that Xibei will re-plan the pace of opening stores in 2025.

Many chain restaurant brands have undergone similar changes, opening stores cautiously and shrinking strategically. In the first half of last year, Xiabu Group also closed 48 Xiabu Xiabu, 23 Qiaomu and 7 Chaishao, closing a total of 78 stores. At the beginning of this year, Xicha announced that it would suspend accepting business partnership applications.

From multi-brand trial and error to focus on the main channel

Behind the scale reduction is the ambition of catering owners.

Previously, Jia Guolong continued to test sub-brands to explore the company’s new growth curve, and successively launched Xibei Oatmeal Workshop, Xibei Yogurt House, Xibei Oatmeal Noodles, as well as Super Roujiamo, Jia Guolong China Castle and other sub-brands, but they have not continued today.

Recently, Jia Guolong decided to abandon all fast-food fantasies and return his energy to the main brand, Xibei. In Jia Guolong’s view, fast food and dinner are different catering models, or even different catering industries. Fast food is more inclined to the industrial catering model and the competition is very fierce.

Jia Guolong said that a series of attempts at fast food can be regarded as sunk costs, but it is also a kind of capacity building. We have tried and made so many mistakes, which may be a sunk cost financially, but how much we can learn from it can be transformed into my capabilities and the team, and the value in this regard is infinite. Even if we know more clearly what we are not good at, we will not touch or do it. This is also a very important gain. To a certain extent, the essence of strategy is to give up. You must know how to be willing to give up, and you must know what to give up without entanglement in the future. I think this is also a huge value and a long-term wealth.” rdquo;

Xibei is not an exception. Many chain catering companies have chosen to abandon those loss-making or high-investment sub-brands and instead focus on their main brands. This has become a general consensus in the industry.

In July last year, Jiabu Group closed its last high-end barbecue brand, Taking advantage of Happy Roast Pork. Coincidentally, last year, Jiumao Group announced that it would stop operating Uncle Nawi is a chef brand and transfer Lai Meili ‘s three mainland restaurants to independent third parties. It also said that it would concentrate resources on Taier Pickled Fish and Chiu Hot Pot Factory in the future. In terms of new tea drinks, Naixue’s tea closed its sub-brand platform in April last year and opened its last store in the country.

However, the current chain catering brands are still exploring more suitable sub-brands. By cutting into popular categories and cost-effective prices, they are expanding diversified business types while ensuring that the style and price positioning of the main brand are not damaged.

Another key decision for Jia Guolong to return to Xibei was to restructure the brand. In December last year, Xibei upgraded the brand LOGO and revitalized Xibei Oat Noodle Village as Xibei XIBEI. Jia Guolong said frankly that by cutting off the naked oat noodle village, the Xibei brand broke free from a category yoke.

Xibei XIBEI Shanghai Dongfang Road Store Photo source: Provided by the company

Obviously, betting on Northwest cuisine and achieving perfection on this track is a major driving force for Xibei’s rise. For example, stir-fried meat is to Chef Fei, and pickled cabbage fish is to Taier. Many brands have bet on this dividend and quickly occupied the market.

At present, the catering industry has formed a pattern of full category competition. According to Meituan data, the chain rate of China’s catering industry has increased from 12% in 2018 to 21% in 2023. While the chain rate is rapidly increasing, emerging brands in various subcategories have sprung up like bamboo shoots after rain and have sprung up in the market. As the market matures, the initial category dividends have come to an end.

Li Feng, a catering strategy expert, pointed out: When category labels become the growth ceiling, leading brands must build more inclusive value symbols. Xibei’s rejuvenation is similar to Yum! China’s independent KFC as a super symbol.& rdquo;

Serving new roast duck is a key step in breaking the border. Recently, Xibei launched roast duck products in some stores in Beijing and Shanghai, with a single set price of 158 yuan. In response to this move, Jia Guolong told Blue Whale News that roast duck is a famous Chinese dish, and serving roast duck is a milestone event for Xibei, which opens up the imagination of the Xibei brand and is an important step in brand renewal.

In fact, some people believe that Xibei Shangxin Roast Duck is a sign of not doing proper work. However, there are also views that hold a positive attitude, believing that this is a positive signal that will bring Xibei, a distinctive northwest food brand, closer to the direction of the national brand. It is not limited to special regional flavors, but is aimed at a wider range of consumption scenarios.

In any case, Jia Guolong’s trouble this time has returned to the dining field he is good at, broadening the track on the basis of focusing on his main business.

Xibei’s scene breaks through”

After refocusing on the dinner business, Xibei’s underlying logic has gradually become clear: use consumption scenarios to iterate on the past category dividends. As Jia Guolong said in his New Year’s message released on New Year’s Day in 2025, one of the new productivity in the catering industry is emotional value. rdquo;

Nowadays, emotional value has become a very concrete one in the catering industry. Once you eat Haidilao, you will immediately have no worries and the wheat door will last forever. The happy gathering scene of Xibei is the logic of complying with this consumption trend. Jia Guolong revealed that Xibei Catering’s latest strategic positioning is a family gathering restaurant, and the brand proposition is to give better food to children.

As the core of a family, children have an unquestionable role in driving the consumption of the entire family. According to relevant data from the China Children’s Industry Center, among more than 80% of the family structure in China, child-related expenditures account for more than 30% of the total household expenditure, and this proportion is still rising steadily, indicating a broad blue ocean in the field of children’s consumption.

Focusing on the catering market, according to data provided by Yingshi Group Research Center, the size of China’s children’s consumption market in 2022 will be close to 4.5 trillion yuan. If calculated at a children’s catering penetration rate of 10%, the size of the children’s catering consumption market can reach 450 billion yuan.

It is reported that the sales of children’s meals now account for 10% of Xibei’s overall. In Jia Guolong’s eyes, this can drive nearly 40% of household consumption.

Data map of Xibei parent-child activities Photo source: Provided by the company

“Let families take their children out to eat and think of Xibei naturally. rdquo; He said that before we did not make efforts to promote, 5% of children’s meal sales accounted for, but now the effectiveness of the promotion has become 10%. I think this opportunity is a good opportunity. What I am thinking about now is, can this ratio be more?” rdquo;

Behind this is the precise reconstruction of the consumption scene: through the dual label of professional children’s meals + family gathering restaurants, the dining scene is shifted from business banquets to family needs.

In addition to the control strategy, Jia Guolong also goes to the front line of stores every day to catch products and services. In addition, the important internal competition system for Xibei first-line stores has also returned. This system provides corresponding incentives through competition and assessment of store teams and employees to stimulate the enthusiasm and creativity of internal employees.

When the catering industry is struggling through consumption downgrades and low prices, how should companies respond to the challenges? Regarding this issue, Jia Guolong said that the era of intensive cultivation in the catering industry has arrived. Traditional extensive management methods are no longer applicable. Players who cannot adapt to new trends will be eliminated in the new cycle.

This time he had a hunch that the crisis might not pass soon. He calls it cat winter now.& ldquo; I think 2025 is still winter. One month in winter will be three years on the market.” rdquo; He explained that compared with two or even three seasons a year in the south, farmers in the north do not work in winter. The same is true for catering. It is precisely to use this winter to rest, collect and reflect.

It can be said that this is not only the rational return of the catering industry, but also the fierce catering competition that forces companies to learn to grow in hibernation.