Frost & Sullivan releases the 'White Paper on the Development of China's Catering Industry in 2025'

Overview of "White Paper on the Development of China's Catering Industry in 2025"

This white paper conducts an in-depth analysis around the macroeconomic background of China and the current development status of the catering industry. It surveys the development of nine major sub-sectors including hot pot, Chinese cuisine, snack and fast food, and ready-to-drink beverages, as well as the main leading brands. The aim is to explore the future development direction of the catering industry in China and to assist catering brands in better seizing industry growth opportunities in their future operations and development.

Source: official websites of various brands, Frost & Sullivan analysis

Macro background of the development of China's catering industry

Source: United Nations, IMF, OECD, National Bureau of Statistics, Xinhua News Agency, LeadLeo Research Institute, Frost & Sullivan analysis

Among the world's major economies, China has a significant advantage in economic growth rate. In 2024, its GDP exceeded 13.49 trillion yuan, growing by 5.0%. The growth rate is significantly ahead of that of the United States, the eurozone, the United Kingdom, etc. China's contribution rate to global economic growth exceeds 30%, making it a key force in global economic growth. Looking ahead, according to the "14th Five-Year Plan," China will rely on a strong domestic market to build a higher level of dynamic supply and demand balance and promote a virtuous economic cycle. As the macro economy continues to improve, this will create a more favorable environment for the catering industry, helping to expand the industry scale, improve quality, accelerate business format innovation and model iteration, and enable the catering industry to play a greater role in consumption and industrial chain aspects.

Source: National Bureau of Statistics, Frost & Sullivan analysis

In China's total retail sales of consumer goods, both merchandise retail sales and catering revenue are showing an overall growth trend. The domestic consumer market continues to expand, residents' consumption capacity has improved, and market vitality has increased, injecting lasting momentum into economic growth. In 2024, China's total retail sales of consumer goods reached 48.3 trillion yuan, a year-on-year increase of 3.5%. Among them, merchandise retail sales amounted to 43.2 trillion yuan, a year-on-year increase of 3.2%, and catering revenue was 5.5 trillion yuan, a year-on-year increase of 5.3%. The rapid growth of catering revenue benefits from the efforts of chain catering brands, with the emergence of tens of thousands of stores one after another, injecting development vitality into the market. The growth rate of catering revenue is higher than that of merchandise retail sales, reflecting the rapid growth of service consumption demand under the transformation of residents' living standards and consumption concepts, optimized consumption structure, and consumers placing more emphasis on consumption experience and quality of life.

While total consumption is steadily growing, the consumption structure is accelerating its optimization and upgrading. With the improvement of residents' living standards and the iteration of consumption concepts, consumers' demand for quality, personalized, and green consumption is becoming increasingly strong. With the continuous expansion of the middle-income group and the steady increase in residents' income, the potential of consumer markets such as catering will be fully unleashed.

Source: National Bureau of Statistics, RedCran Network, LeadLeo Research Institute, Frost & Sullivan analysis

In recent years, the catering industry in China has shown a strong growth trend, with revenue fluctuating upwards. In 2024, the total revenue of China's catering industry reached 5,571.8 billion yuan, a year-on-year increase of 5.3%. The industry scale continues to expand and the market develops steadily. However, the growth rate slowed down significantly in 2024. After the relaxation of domestic home control measures in 2023, consumer demand was concentratedly released, driving rapid growth in the catering industry. The slowdown in growth in 2024 is partly due to the market becoming more rational and consumer demand returning to stability; on the other hand, as the catering market scale continues to expand, its growth rate will tend to slow down.

In 2024, the number of registered catering industry enterprises reached 3.6 million, a significant increase compared to previous years. This data indicates that a large number of new catering enterprises continue to pour into the market, reflecting the continuous increasing market attractiveness of China's catering industry. It also confirms that the scale of the catering industry is steadily expanding, with new investment and entrepreneurial vitality continuously being unleashed. In terms of online catering, although the overall growth rate shows a downward trend, its growth rate has always been higher than the national catering year-on-year growth rate. This means that the proportion of online catering business in the industry continues to rise and has become an important engine driving the growth of the catering industry. With the increasing maturity of delivery platforms and the widespread penetration of digital marketing, the online catering market is constantly expanding its boundaries and maintaining an expansionary trend.

Supply chain situation of the catering industry in China

Source: China Federation of Logistics and Purchasing, provincial statistical bureaus/statistical bulletins, Frost & Sullivan analysis

The upstream ingredient consumption and ingredient supply chain market scale in China's catering industry showed a common characteristic of 'overall growth but gradual slowdown' from 2023 to the first quarter of 2025. Specifically, in terms of the ingredient consumption market, the market scale reached 9.4 trillion yuan in 2023, a year-on-year increase of 10.3%; by the first quarter of 2025, the market scale was 2.7 trillion yuan, with the year-on-year growth rate slowing down to 3.0%. The growth momentum has gradually weakened, reflecting that the catering industry's demand for ingredient supply is shifting from 'quantity expansion' to 'quality improvement'.

As of March 2025, the stock of related enterprises in China's catering industry reached 16.89 million, maintaining a growth trend but with diminishing momentum. Previously, emerging business models such as takeout, ready-to-eat meals, and franchising have continuously emerged, driving the continuous growth of the catering enterprise stock. However, at the same time, with the continuous increase in the number of catering enterprises, market competition has become increasingly fierce, and homogeneous competition has become prominent, limiting the expansion of enterprises and the entry of new businesses.

Chain operation pattern of the catering industry in China

Source: China Chain Operation Association, China Cuisine Association, Meituan, Frost & Sullivan analysis

The catering industry dominates the franchising market in China. As of December 2024, there were a total of 12,756 franchised enterprises registered with the Ministry of Commerce, among which catering enterprises accounted for 49.4%. With the continuous development of the industry, this proportion is expected to remain stable or further increase. In terms of the distribution of franchise stores, enterprises with 0-30 franchise stores account for 87.0%, indicating that having 30 franchise stores is an important threshold in the process of enterprise chain expansion. Geographically, franchise headquarters are mainly concentrated in economically developed first-tier cities such as Beijing and Shanghai. In terms of investment and financing, the catering industry in China has shown new trends in investment and financing. Billion-level financing has contracted, and the industry's competitive logic has been reshaped, shifting from the model of 'competing for scale and burning money for expansion' to the model of 'competing for operations and meticulously managing chains'.

Chainage rate of categories in the Chinese catering industry

Source: China Chain Operation Association, China Cuisine Association, Meituan, Frost & Sullivan analysis

From 2020 to 2024, the chain rate of China's catering industry steadily climbed, increasing from 15% to 23%, showing a significant trend towards chain development. Looking at sub-sectors, from 2022 to 2024, the chain rate of beverages, desserts and breads, international cuisine, and other categories continued to rise. Among them, the chain rate of beverages reached 49% in 2024, showing particularly significant growth. The chain development process in the catering industry is advancing continuously and shows characteristics of category differentiation. Snacks and fast food, beverages, and other categories have performed outstandingly in terms of the number of chain stores and chain rate, becoming key forces in industry development. In contrast, the chain development of traditional Chinese cuisine and other categories is relatively slow. Snacks and fast food, beverages, and other categories are characterized by high consumption frequency, easy standardization, and relatively low unit prices, which meet the current consumer demand for convenient and efficient dining in the fast-paced lifestyle and are also conducive to chain replication and promotion. At the same time, capital also favors investing in these high-potential and fast-returning categories, providing financial support for the chain development of brands.

Chain operation pattern of the catering industry in China

Source: China Chain Operation Association, Meituan, Frost & Sullivan analysis

● Trend 1: The popularity of high-tier cities is heating up

From the perspective of regional distribution characteristics of catering chain stores, new first-tier cities accounted for 23.4% in 2024, followed closely by second-tier and third-tier cities, forming a core echelon in the regional layout of chain catering. This difference reflects the strategic adjustment pace of chain brands in different tier markets. In terms of the chain rate indicator, first-tier and new first-tier cities continued the trend of deepening chain operations in 2024. Among them, first-tier cities featured a chain rate of 35.1%, highlighting the resource concentration effect of leading brands in highly competitive markets.

Source: IMF, RedTable, Frost & Sullivan analysis

● Trend 2: Chain brands accelerate their overseas expansion

In recent years, the overseas Chinese cuisine market has shown a stable growth trend with continuous expansion in scale. Data shows that its market size has steadily climbed from $341.3 billion in 2024 to an expected $409.8 billion by 2028, with a compound growth rate of 9.4% during this period. This growth not only reflects the increasing popularity of Chinese cuisine globally but also benefits from the expansion of the basic consumer base brought about by the growth of overseas Chinese communities, the deepening of cross-cultural exchanges that promote the integration of dietary cultures, and the enhancement of international operational capabilities such as supply chain optimization and localization adaptation by catering enterprises. Under the combined action of multiple factors, the overseas Chinese cuisine market shows broad development prospects and sustained vitality.

The population growth and economic development trends in Southeast Asia are jointly driving the region to become one of the most potential dining markets globally. In terms of demographic fundamentals, the total population of Southeast Asia has exceeded 695 million. Overall, the population structure of the region shows a youthful characteristic, with an average age of about 26 years. The working-age population aged 15-64 accounts for more than 67%, making the young group the core driving force of the consumer market. The acceleration of urbanization has further fueled the high-frequency demand for convenient dining forms such as fast food and ready-to-eat meals. At the economic level, the GDP of the six Southeast Asian countries is expected to reach $3.8 trillion by 2025, approaching the size of the world's fifth-largest economy. With economic growth, the scale of the middle class in Southeast Asia continues to expand.

Source: China Chain Operation Association, RedCAN, Meituan, Frost & Sullivan analysis

● Trend 3: Online catering shows vitality

In terms of online catering, its growth rate has always been higher than the national catering year-on-year growth rate. This indicates that the proportion of online catering business in the industry continues to increase and has become an important engine driving the growth of the catering industry. With the maturation of delivery platforms and the widespread penetration of digital marketing, the online catering market is constantly expanding its boundaries and maintaining an expansionary trend. The online penetration rate of catering categories is highest on the Douyin platform, followed by Rednote. There are significant differences in data among the four platforms, with the core logic lying in the matching degree between platform user profiles and catering category characteristics. As a national-level application, Douyin has a user base covering all age groups, especially showing a significant proportion among lower-income markets and household users. The core consumption scenarios of Chinese cuisine are highly coincident with the needs of this type of user, which constitutes the basis for its high penetration rate.

Source: Redcan Network, Meituan's 'Shanghai “Safe Food Delivery” Food Safety White Paper', Frost & Sullivan analysis

● Trend 4: Transparent delivery

Large headquarter chain catering brands are actively deploying delivery services, enhancing service transparency through scenario transformation and process optimization. One of their core initiatives is to upgrade the original dine-in areas into 'Transparent Kitchen Live Streams,' building a trust foundation with visual scenarios. In actual operations, staff take photos to record key processes such as hot pot boiling and serving, precise spoonfuls of soup base, and meal portioning and packaging, which are then synchronized to consumers immediately. This move responds directly to consumers' core concerns about food hygiene and safety through a transparent delivery chain model, further strengthening the brand's trust barrier in instant catering services. Data shows that factors such as real-time live kitchen videos can most effectively enhance consumer trust in businesses. At the same time, local innovation platforms and delivery platforms are exploring food safety management, with catering brands 'moving kitchens to tables,' among other measures, laying a solid foundation for the high-quality development of delivery services.