Frost & Sullivan releases the 'White Paper on the Development of the Chinese Hunan Cuisine Industry in 2024'

The catering service industry refers to the food production and business sector that specializes in providing consumers with various alcoholic beverages, foods, dining venues, and facilities through immediate processing and production. According to cuisine, China's catering industry can be divided into Chinese cuisine, Western cuisine, and other cuisines (including Japanese cuisine, Korean cuisine, Thai cuisine, etc.). Furthermore, based on service methods and meal durations, China's catering industry can be categorized into full-service meals, fast food, and other cuisines (including snack bars, roadside stalls, street vendors, etc.).

Data source: Analysis by Frost & Sullivan

China's catering industry has maintained rapid and stable development, with total catering revenue in society growing to exceed 5 trillion yuan in 2023. Among them, Chinese cuisine is highly favored by consumers and has become one of the main sub-markets in China's catering industry, entering a new stage of brand enhancement and rapid expansion. The scale of China's Chinese cuisine market grew from 3.7 trillion yuan in 2019 to 4.1 trillion yuan in 2023, accounting for nearly 80% of the entire catering market. With consumers' pursuit of healthy diets, the enhancement of cultural confidence, the continuous emergence of innovative dishes, and the popularization of takeaway services, it is expected that the Chinese cuisine industry will reach 6.1 trillion yuan by 2028.

Data source: Analysis by Frost & Sullivan

China has a variety of local cuisines, which can be further divided into eight major regional cuisines based on their geographical origins, as well as some other local cuisines such as Beijing cuisine, Northeastern cuisine, and Jiangxi cuisine. The eight major regional cuisines of China are Hunan cuisine, Shandong cuisine, Sichuan cuisine, Cantonese cuisine, Jiangsu cuisine, Zhejiang cuisine, Fujian cuisine, and Anhui cuisine. They not only demonstrate the profoundness of Chinese culinary culture but also reflect the unique flavors and cooking techniques of various regions in China, making them an important part of Chinese culinary culture. Among them, Hunan cuisine, as one of the representatives of the eight major regional cuisines, has a long history and rich products. It attracts many diners with its strong market atmosphere and unique pot cooking technique.

Source: Public data, Frost & Sullivan analysis

Xiang cuisine has a profound historical heritage and is renowned for its freshness, aroma, and spiciness, making it deeply loved by consumers. In recent years, it has gradually become a popular choice in the national and even overseas catering markets, showing strong development momentum. In the early stages of industry development, traditional Xiang cuisine restaurants were the mainstream, offering more complex dishes that included various cooking techniques, and gradually expanding from Hunan Province to surrounding areas. In the mid-stage, with the acceleration of modern life rhythms, Xiang cuisine small dish brands have developed rapidly, meeting the needs of young consumers for speed, convenience, and deliciousness with their fast service, high cost-effectiveness, and efficient operations. Currently, competition in the Xiang cuisine industry is becoming increasingly fierce, and major brands have begun to focus on chain operations, using standardized dishes and services, large-scale expansion, etc., to enhance competitiveness and open up the national market.

Source: Public data, Frost & Sullivan analysis

In 2023, the market scale of Hunan cuisine catering in China exceeded 220 billion RMB. As of September 30, 2024, the total number of Hunan cuisine regular restaurants in China reached approximately 100,000. Hunan cuisine has gained the favor of consumers with its fragrant, fresh, and spicy flavors. Hunan cuisine restaurants are widely distributed, with the number of restaurants in Hunan Province and Guangdong Province significantly higher than in other regions, followed by Hubei, Zhejiang, Jiangsu, Jiangxi, Henan, and other places. Overall, Hunan cuisine is currently thriving mainly in the southeastern regions of China, and there is still considerable potential market space for its development in the northwest, north China, southwest, and other regions.

Data source: Analysis by Frost & Sullivan

●Nationalization and Chain Operation

Xiang cuisine originated in Hunan and has gained a high market penetration rate in the southeast region, first-tier cities, and new first-tier cities due to its unique flavor. Facing the dual challenges of regional taste differences and cross-regional management, future Xiang cuisine brands will gradually penetrate into second, third, and fourth-tier cities through product iteration and local flavor adaptation, while continuing to develop in the northern region. At the same time, Xiang cuisine brands will achieve refined operations by streamlining SKU's, improving standardized management and meal preparation efficiency for stir-frying and making. It is expected that in the future, related enterprises will further focus on brand building, increase the rate of brand chain operation, and achieve broader market coverage.

●Improve the construction of the supply chain

The unique flavor of Hunan cuisine depends on fresh local ingredients, making direct procurement from the origin key to ensuring ingredient freshness and food quality. With the continuous expansion of the Hunan cuisine market, brands are expected to continue by building their own ingredient bases and establishing long-term stable cooperative relationships with origin suppliers to enhance the stability of the upstream supply chain. At the same time, brands will further improve an efficient cold chain logistics system to achieve full-link traceability of agricultural product information on the supply chain and optimize operations at each link. Brands will enhance their market competitiveness through the improvement of the supply chain system to meet consumers' demand for a high-quality dining experience.

●Refined services and operations

Xiang cuisine, with its natural down-to-earth and accessible characteristics, is more readily accepted by the public, forming a widespread public perception. On this basis, some Xiang cuisine brands have begun to optimize and upgrade through various aspects such as store services and dining environments to enhance consumers' dining experience. It is expected that in the future, these brands will continue to innovate in services and environments, such as through digital transformation to improve service efficiency and personalized experiences. At the same time, brands will pay more attention to customer consumption experiences, establishing the goals and mechanisms of catering product research and development on the basis of consumers' personalized experiences, thereby winning consumers and creating personalized catering brands.

●Diversified dish innovation

The brand will continue to innovate through the reinterpretation of old dishes and the alteration of cooking methods. The reinterpretation involves introducing different combinations of ingredients and repackaging the menu items to cater to the needs of consumers from various regions. At the same time, by changing cooking methods, dishes can present different flavors, textures, and forms, which not only satisfies consumers' pursuit of novel cuisine but also helps in the differentiated competition of Hunan cuisine brands. In addition, Hunan cuisine brands will focus on the visual presentation of products and the innovative design of storefront environments to enhance consumers' dining experience and brand recognition. Through this multi-dimensional innovation, Hunan cuisine brands will attract a broader consumer base and thus gain a favorable position in the highly competitive catering market.

Lanxiangzi was established in April 2019, focusing on the 'Xiang cuisine stir-fry' segment. It positions itself for a niche customer base, deeply ingrained in the philosophy of 'fresh and freshly stir-fried, quality first', and fulfills its five major commitments to customers. Lanxiangzi always adheres to selecting high-quality ingredients, sourcing directly from the origin and delivering them on the same day. It also deeply invests in the upstream supply chain to ensure the freshness of ingredients. At the same time, Lanxiangzi implements the 4D kitchen management rule, where each dish is freshly stir-fried to create delicious dishes while ensuring efficient service.

Lanxiangzi has clearly defined its strategic positioning at the early stages of brand establishment. By optimizing the supply chain and providing personnel training, it actively improves the quality of dishes and services, offering customers a highly cost-effective dining experience that is deeply loved by consumers. At the same time, Lanxiangzi seeks progress while maintaining stability. Through a steady expansion strategy, it has gradually opened up the national market, achieving double growth in store size and operating income. It is a well-known brand in China's Hunan cuisine catering industry.

Source: Public data, Frost & Sullivan analysis