Online catering proves recipe for investor success

Several dozen delivery men ride down a street in Kaifeng, Henan province. [Photo by Li Junsheng/For China Daily]

BEIJING — China's online catering sector is continuing to expand quickly, as more than 300 million meals are expected to be ordered online this year, according a recent industry forecast.

The country's takeout business will account for more than 10 percent of the catering industry's total retail revenue by 2020, said Jiang Junxian, head of the China Cuisine Association.

In 2016, a total of 256 million meals were ordered online, up 22.5 percent from 2015, he revealed at an industry conference on online catering.

The market size of China's take-out business exceeded 160 billion yuan ($23.49 billion) in 2016, up 33 percent year-on-year, Jiang said.

The craze sweeping across the country has provided new business opportunities for young entrepreneurs.

"Opening a restaurant would be very costly while starting online catering seemed to be a better idea for me, especially as it benefits a lot from the booming internet sector," said 24-year-old Ha Nan, CEO of the Beijing Liushanmen Technology, an internet catering company.

Seeing the potential of the emerging takeout sector, Ha founded Beijing Liushanmen Technology in 2014 after graduating from the University of International Business and Economics.

As well as offering meals for individual and group clients, his company also offers complete catering supply chain solutions and intelligent hosting services for restaurant chains and cafes.

"As the environment changes and competition gets fiercer today, we cannot only rely on the internet catering system itself, but also have to seek new growth points, such as the supply chain business which can fuel the development of traditional restaurants." Ha added.

So far the company has raised 10 million yuan in investment and has notched up monthly revenue of around one million yuan.

Besides regular meals, Chinese diners are becoming increasingly interested in other types of online catering services such as late-night snacks and afternoon tea.

Last year, the transaction volumes for these two types of services jumped more than three-fold on Ele.me, one of the country's largest online catering platforms, much higher than the growth in lunch and dinner orders.

The thriving online business has also brought vitality to the country's traditional catering sector. For Jinbaiwan, a chain restaurant famous for Peking duck and traditional Chinese cuisine in Beijing, the takeout business now accounts for nearly 800,000 yuan of its daily revenue, or 40 percent of its total turnover.

Facing the brisk growth of the online catering sector, Jiang said food safety was always a top priority, which required close cooperation between caterers and delivery providers.

A report from market consultancy iiMedia Research revealed that 256 million people ordered online takeouts in China last year, an increase of 22.5 percent year-on-year. And it is expected that the number will grew to 301 million by the end of this year.

The report said that the market will continue to grow, but at a slower rate, and online catering companies will need to focus on offering better services to retain their current customers.

According to the report, food safety and delivery speed are the two main factors customers consider when choosing an online catering platform.

It said that in order to improve service quality, companies need to focus on food safety, which will help them offer a better user experience and improve their competitiveness in the booming market.

Xinhua - China Daily