I remember just about two years ago, the joke "China's food delivery cross-industry killed instant noodles" was still a favorite among Chinese netizens. In the blink of an eye, this year instant noodle sales began to surge and last month broke through 40 billion packs, reclaiming lost ground. On the other side, Meituan suffered a huge loss of 115.5 billion, leaving the capital market that was bullish on food delivery last year speechless and red-faced.
How did instant noodles, which had been deemed to have "passed this stage of development" and were ready for death, come back to life in China?
The resurrection of instant noodles is actually a rather awkward topic for some, because this thing has long been firmly tied to concepts like loser, unhealthy, and low-level consumption. If old parents heard that their children far from home were eating instant noodles, they would secretly wipe away tears.
In 2017, people were still using "everyone has abandoned instant noodles" to support the idea of consumption upgrading. Less than two years later, the words are still ringing in our ears. How to explain it away?
So analysts have to force an explanation: although instant noodle consumption has returned, it's because high-end instant noodles are getting better, so everyone is eating high-end ones now. Instant noodles priced at 20-30 yuan per serving are selling particularly well, so in this sense, it still counts as consumption upgrading.
That's talking nonsense with eyes wide open. If you're reduced to eating instant noodles, how many people would buy that 30-yuan one? With a 30-yuan meal budget, how many would still choose instant noodles? What magical instant noodle can compete with freshly cooked food in taste?
Moreover, according to the same Master Kong sales data, while instant noodles rose, the beverage sector's revenue declined. If it were upgrading, shouldn't they upgrade together? How come people eat noodles but skip drinks?
Actually, there's no way to explain it away. The essence of the surge in instant noodle sales can only be that people are starting to tighten their belts. When people become frugal, it forms a trend, causing more people to become frugal.
There are many more examples: pickled vegetable sales surge, cars and luxury goods hit bottom, and real estate, whether in price or transaction volume, is no longer as lively as before. It all means the same thing.
The instant noodle industry has little technical content, no moat, no secret recipes. Whatever lost ground it regains must be exactly what food delivery lost—the two are in a complete zero-sum competition.
So did the food delivery industry do anything wrong? Actually, no. It's just like ride-hailing: after forming a duopoly, the fake prosperity supported by subsidies could no longer be maintained, nor did they have the strength to maintain it.
A couple of days ago, I took a Didi from Shenzhen T3 to Luohu, costing me nearly 200 yuan. The car was a shabby domestic brand I couldn't name, with almost no sound insulation. A few years ago, this distance would have cost no more than 100, usually 80-90.
But I didn't complain to Didi, because I know that price back then was unreasonable—it was a "customer acquisition cost" sustained by losses. And the current price may not even be the final one, as Didi is still heavily loss-making.
Thinking back 4-5 years ago when ride-hailing subsidies were strongest, many people excitedly marveled online how convenient it was: "For a few yuan, you can get a car; who still takes taxis?" Now those people are silent. It's 50 yuan minimum to go anywhere, and they obediently squeeze back onto the subway. Is this consumption downgrading? Of course not. It's that you couldn't afford it in the first place; the trial period is over.
The food delivery industry is the same. Do you really think you can spend 2 yuan to have a stranger, braving 37-degree heat or storms, bring you a bowl of fried rice noodles that you'll toss after a few bites? Who do you think you are?
Spending only 2 yuan before was to lure you in. Now Meituan spends 9 billion yuan a year just on delivery riders, and this expense is the fastest-growing among all costs.
What is the truly reasonable labor cost for one delivery? KFC and McDonald's charge 9 yuan per delivery. Considering their reasonable outlet distribution, this price should be considered cheap. Without 10 yuan, who would be willing to go to those remote corners to pick up your takeout and run all the way to you?
Now the question is: are the budget-conscious willing to spend 10 yuan to have someone run errands for them? The recovery of the instant noodle market gives the answer.
The difficulties facing the food delivery industry are not just rising labor costs. As a consumer, I believe you, like me, are ordering less takeout this year. Why? Two reasons: 1) things are getting more expensive, and 2) there are fewer distinctive restaurants.
Things getting more expensive is not originally the fault of delivery platforms. According to the National Bureau of Statistics, pork prices rose 46.7% year-on-year in August, the highest increase since January 2001.
Now in first-tier cities, at a decent restaurant, ordering a vegetable dish and a boiled fish costs around 100 yuan, whereas a few years ago it was only about 60.
Of course, this is primarily due to natural disasters, so let's set that aside. But a considerable number of price-sensitive people (i.e., 90% of the masses) have choices. Open the delivery app and see: what? One dish costs over 70? Think about spending one or two hundred just on food a day—how painful for your old parents to know. Forget it, a bowl of instant noodles brings back the green-skinned train era. Eating is saving; saving is earning. I think that's fine.
There's another problem with food delivery that few have noticed, but I have—delivery platforms have, intentionally or unintentionally, eliminated the diversity of dining over the past two years. The disappearance of many small shops is a big problem. If wherever you open the delivery app, it's all the same Yoshinoya, Burger King, some noodle chain, or some Northeast grilled kidneys, what's the point? Just looking at it makes you sick.
Because these so-called chain restaurants can integrate most closely with delivery platforms, they have driven out small shops that can't adapt to the delivery ecosystem. This backfires, causing diners to suffer aesthetic fatigue and become too lazy to open the delivery app.
If delivery platforms can't solve these two problems, the revival of the instant noodle market is still in its infancy.
Now it seems delivery platforms are at their wit's end. Can you out-price the low cost of instant noodles? Instant noodles are probably the food category least sensitive to meat prices (because there's barely any meat in them).
Actually, spectators need not sigh over the revival of instant noodles. Instant noodles have always been tied to industrialization and urbanization. The rural migrant population leaving the countryside, the emergence of a large industrial workforce, and the explosive growth of traffic made this uniquely Chinese convenience food possible, and also created a collective memory for a generation.
China's economy and consumption are not actually too bad, but compared with its own past, it has clearly lost some glory, and expectations have changed significantly. People are spending more carefully, saving where they can, and are more sensitive to prices. Wage growth has slowed significantly in recent years, and some industries have seen unemployment. Mortgages have squeezed young people's disposable income, leaving other consumption to tighten.
Consumption is built on expectations of future income. With uncertain future income prospects, consumption choices naturally become more prudent. Consumption downgrading is especially evident among the younger generation, as their income levels are limited and they can't always live beyond their means, but it is also reflected in a considerable portion of the middle class.
In recent years, most of the income growth has gone to the ultra-high-net-worth individuals or low-end laborers/rural landowners. The middle class has benefited less but has been squeezed by inflation. Those who became mortgage slaves have to pay for their high leverage.
The shrinking purchasing power of the middle class is not unique to China; it has appeared in the US, Europe, Japan, Russia, and even Hong Kong and Singapore.
The landmark economic event of the past decade was QE, where central banks injected increasing liquidity into the economic system by expanding their balance sheets. However, almost all countries experienced a weakening of the banking and financial intermediation function.
The newly created liquidity did little to help the real economy, so the general public saw limited gains in real income. Liquidity remained in financial markets, and those able to invest in financial assets benefited more, with leveraged operators gaining even more. This phenomenon occurred first in Japan and Europe, gradually spreading to the US and China.
As for how long this will last, I once heard a view, take it with a grain of salt: The decline in the middle class's actual purchasing power is a new trend that will continue for a considerable time. First, the source of wealth creation has shifted from the real economy to capital markets, from wage income to investment income.
Second, the income gap between blue-collar and white-collar workers has widened, as has the gap between workers and senior management. The post-war high-growth period driven by globalization has come to an end, and the middle class should be the main victim of the disappearance of growth dividends.
Of course, maybe those "braised beef noodles," "scallion pork chop noodles," and "Sichuan spicy beef noodles" really do contain a few pieces of meat?
I haven't eaten them much in the past two years, so if there are any errors or omissions, please point them out.
Source: Feifei Mao's Bistro (ID: ffmpublic@qq.com)
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