Last week, 21 pre-made dish concept stocks on the Shanghai and Shenzhen stock exchanges continued to strengthen. As of January 20, Delisi (002330.SZ) hit the daily limit for 7 consecutive days, while Haixin Foods (002702.SZ) and Fucheng Shares (600965.SH) had four consecutive limit-up days. Guolian Aquatic Products (300094.SZ) rose about 100% since the start of 2022.
A research report by Shanxi Securities predicts that China's pre-made dish market will reach 340 billion yuan in 2021, a year-on-year increase of 18%. In the next 3-5 years, the industry is expected to become the next trillion-yuan catering market.
According to Qichacha data, since 2013, there have been 71 investment and financing events in the pre-made dish track, with a total disclosed financing amount exceeding 1 billion yuan, involving 42 projects.
In terms of financing timing, 2015-2016 was a peak period, with 14 and 17 financing events respectively. Another peak occurred from 2020 to 2021, with 12 financings in 2020 and 13 so far in 2021.
Pre-made dishes can be divided into two major categories. The first category includes frozen foods that ordinary consumers have long been familiar with, such as steaks and frozen dumplings. These are also known as "ready-to-heat foods."
The second category, commonly understood as pre-made dishes, refers to finished or semi-finished products made from agricultural, livestock, poultry, and aquatic products, with various auxiliary ingredients, after pre-processing (such as cutting, mixing, curing, tumbling, shaping, and seasoning). These are divided into "ready-to-cook foods" and "ready-to-prepare foods."
Ready-to-cook foods can be put directly into the pan. Ready-to-prepare foods need to be combined with other dishes and seasonings before cooking.
Pre-made dish industry for the B-end
At the beginning of this year, Lu Zhengyao, who failed in the coffee track, was revealed to be entering the pre-made dish project. According to media reports, his company, Shejian Technology Group, is incubating a new pre-made dish project called "舌尖工坊" (Shejian Workshop). According to official introduction, Shejian Workshop purchases fresh raw materials from origin, processes them into semi-finished products, stores them frozen or refrigerated, and transports them to retail terminals via cold chain.
Some articles believe that Lu Zhengyao is a master at "catching hot spots." Is the pre-made dish track about to heat up? According to CBNData's "2021 Convenience Food Industry Insight Report," the convenience food industry has grown steadily in recent years, with an estimated domestic market size exceeding 250 billion yuan, and the online scale of convenience food categories has grown by over 70% in the past year.
Pre-made dishes for the B-end mainly fall under the "ready-to-prepare food" subcategory, which requires combining with other dishes and seasonings before cooking.
So far, the success of the pre-made dish industry has been more in the B-end.
That is, pre-made dish companies supply raw ingredients that have been cleaned, cut, and packaged to B-end catering companies. Many chain restaurants have over 60% of their dishes as pre-made dishes. Chains like Zhen Kungfu, Jiawang, Jiahe Yipin, Babi Mantou, Jixiang Huntun, Laoshengxiang, and Dongfang Dumplings are all using pre-made dishes.
For upstream pre-made dish companies, their B-end users include snack and fast food restaurants, chain stores, delivery, rural caterers, and group meal canteens. The B-end market accounts for 80% of the total pre-made dish sales.
For catering companies, using pre-made dishes can effectively reduce kitchen space and staff, thereby lowering costs and easing pressure on rent and labor.
According to data from the China Chain Store & Franchise Association, more than 74% of chain catering companies in China have built their own central kitchens, distributing pre-made dishes to stores for preparation. Among them, leading chain catering companies have a high proportion of pre-made dishes, with companies like Zhen Kungfu, Yoshinoya, Xibei, and Xiaonanguo using pre-made dishes for over 80% of their dishes.
Additionally, the rise of the delivery industry, with its time-sensitive nature, has also driven demand for pre-made dish ingredients.
On April 27, 2021, Weizhixiang, a pre-made dish company registered in Suzhou, Jiangsu, listed on the A-share market. Within a month of listing, its stock price rose over 300%.
This company's main business is providing frozen products and pre-made dishes to catering companies, with clients including well-known brands like KFC, Pizza Hut, Haidilao, and Xiabuxiabu.
According to its prospectus, from 2018 to 2020, Weizhixiang achieved operating revenues of 466 million yuan, 542 million yuan, and 622 million yuan, and net profits of 71.1249 million yuan, 86.2433 million yuan, and 125 million yuan, with net profit margins of 15.26%, 15.9%, and 20.09% respectively. In terms of revenue, 70% came from meat and poultry products, followed by aquatic products.
Turning to the C-end
With the continuous segmentation of the "lazy economy," pre-made dishes have begun to target the C-end, i.e., individual consumers. However, when the pre-made dish business targets individual consumers, it is not as easy to scale up and stabilize as it is with catering companies.
Huachuang Securities estimates that the current pre-made dish market size in China is around 200 billion yuan, with 180 billion yuan from the B-end and 40 billion yuan from the C-end. The compound annual growth rate over the past decade has been around 20%, with a rate of about 30% from 2014 to 2019.
Although the current demand from the C-end is small, there are some "imaginable possibilities," such as:
First, the entry barrier for C-end pre-made dish companies is low. Unlike the B-end, which requires higher qualifications and larger scale, new entrants targeting individual consumers can start from scratch.
Second, if market acceptance increases, the consumption frequency and scale of the C-end market have significant room for growth.
Third, customized pre-made dishes for the C-end have much higher profit margins than those for large-scale B-end clients.
The C-end pre-made dish model has actually existed for a long time. A large number of catering companies have become the earliest suppliers of pre-made dishes to individual users.
For example, Haidilao, through its brand "开饭了" (Kai Fan Le), launched over ten convenient dishes that only need 5 minutes of cooking, with 24-hour delivery in Beijing. Xibei Youmian's "贾国龙功夫菜" (Jia Guolong Kung Fu Cuisine) has over 200 stores, where consumers can buy and heat the dishes in-store or order online for home delivery.
These catering companies further process their purchased dishes, transforming them from "ready-to-prepare foods" into "ready-to-cook foods."
Additionally, e-commerce platforms have also started to enter the consumer-oriented pre-made dish market.
As early as after the pandemic in 2020, Hema established a 3R division (ready-to-heat, ready-to-eat, ready-to-cook) and launched its own semi-finished product brand "盒马工坊" (Hema Workshop) to enter the pre-made dish field. According to statistics, quick-cook dishes account for over 60% of Hema Fresh's online sales, with many being Hema's own brand products.
Since January 2021, Dingdong Maicai's quick-cook dish gross merchandise volume has tripled its share of the total, now reaching 10%, making it one of the fastest-growing categories.
Do young people love pre-made dishes?
Recently, the concept of pre-made dishes has become popular again, mainly targeting C-end consumers.
Who is buying pre-made dishes? The head of Dingdong Maicai's pre-made dish division said that the age range of pre-made dish users on the platform is around 30-45 years old, with relatively more married people with children, higher education levels, more white-collar workers, less price-sensitive, and with higher demands for product quality and health.
However, in reality, the rise of the pre-made dish concept still faces significant uncontrollable factors when targeting the C-end. First, the essence of pre-made dishes is a "low-tech" business.
Its essence is cleaned vegetables plus seasonings. In this "mixing" process, consumer needs and preferences vary greatly, making it difficult to get them to "give a good review" for the pre-made dishes they receive.
For Chinese culinary tastes, major cuisines like Sichuan, Cantonese, Shandong, and Jiangsu each have their own characteristics and representative dishes. Users have different preferences, and each cuisine has its user base. A pre-made dish brand trying to "unify the world" is full of difficulties and challenges.
From the consumer's psychological perspective, pre-made dishes also have a certain "blind box" nature. Chinese people are accustomed to eating freshly stir-fried dishes, believing that the taste and ingredients are freshest when just out of the wok. So how can pre-made dishes replicate the taste of stir-fried dishes without making users feel a difference? Moreover, in packaging, the freshness of the dishes and the healthiness of the ingredients are also questioned.
For pre-made dish companies, when targeting C-end consumers, the biggest competitor is actually "food delivery." Whether young people choose pre-made dishes to show off their cooking skills or directly choose food delivery may vary from person to person and from consumption scenario to scenario.
Source: New Retail (ID: ixinlingshou)
-END-