This report looks at the following areas:
- Market outlook and growth prospects of limited-service restaurants (LSRs, including quick service and Western casual dining restaurants)
- The competitive landscape of the LSR market and the development of leading brands
- The latest product trends and growth opportunities
- The consumption trends, notable consumer groups and segments of the LSR market
- The attributes, consumption occasions and ordering methods that consumers pay attention to
- The development and prospects of Chinese quick service brands
Store numbers, products offering good value for money, speed and convenience help limited-service restaurants become a key market in China's foodservice industry.
Bernie Gao, Analyst, China Insights
Market Definitions
LSRs are defined as foodservice venues where the customers pay immediately after ordering, and where their interactions with the staff do not go beyond the point when their food is served. A typical customer journey is simple and clear, including ordering, paying and receiving the meals (picked up by themselves or served by staff). The average spend per person per meal (excluding alcohol) is usually no higher than RMB100. Foodservice brands without dining areas are excluded.
Subgroup definitions (by consumption frequency):
- High-frequency users: respondents who consume at LSRs ‘several times a week’
- Mid-frequency users: respondents who consume at LSRs ‘once a week’ and ‘2-3 times a month’
- Low-frequency users: respondents who consume at LSRs ‘once a month or less’
- Non-users: respondents who haven’t eaten at LSRs in the last six months
Collapse All
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Executive summary
- Key issues covered in this Report
- Definitions
- What you need to know
- The market
- Quick service brands achieved rapid growth with value-for-money
- Healthy concepts and precise positioning are the growth engines of Western casual dining
- Market factors
- Companies and brands
- Chinese brands leverage franchising, while domestic Western-style quick service brands emerge with Chinese-Western fusions cuisines
- Western casual dining brands gain foothold through store expansion
- Marketing activities
- New product trends
- Examples of products that reflect these trends
- The consumer
- Chinese quick service leads the market, while Western casual dining shows great potential
- Graph 1: on-premise food consumption venue, 2024
- Rice is most frequently ordered by consumers at LSRs
- Graph 2: consumption frequency by category, 2024
- Vegetables are key to the menu
- Graph 3: menu interest, 2024
- Consumers prefer ordering workday lunches via third-party apps
- Graph 4: consumption occasions and ordering methods, 2024
- 'Good value for money' is the most appealing attribute
- Graph 5: appealing features, 2024
- Short video platforms lead LSR brand communication
- Graph 6: information channels, 2024
- Increase overall performance with daypart-based marketing
- Issues and insights
- What we think
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The market
- Market size and forecast
- Quick service brands grasped the chance for rapid growth and dominated the market
- Western casual dining achieved high growth with healthy concepts and precise positioning
- Market factors
- The foodservice market recovered rapidly in 2023, but consumers remained cautious
- Related organisations advocate for foodservice brands to take on social responsibility and establish an ESG system
- Policies released to further regulate ready meals on the market
- Launch complementary products to include at-home scenarios
- Brands actively respond to 'intentional spending'
- Chinese rice-meal quick service* brands hit the bottleneck
- Foodservice from new retail businesses will challenge LSRs
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Companies and brands
- Market share
- Chinese brands leverage franchising, while domestic Western-style quick service brands emerge with Chinese-Western fusion cuisines
- 'Classic' Western-style quick service brands saw steady growth
- With lower market concentration, Western casual dining brands rapidly open stores
- Marketing activities
- Leverage classic IPs to tap into nostalgia
- The evolving localisation: marketing that combines historical and culinary culture
- Leverage O2O businesses to broaden audience and boost performance
- Provide signature products to enhance brand characteristics
- New product trends
- Integrate Sichuan/Hunan cuisine flavours with chilli and spicy twists
- Offer special taste experiences by integrating regional culinary highlights
- Partner with sports brands to design products for active consumers
- Small-portion snacks enriching menu choices
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The consumer
- On-premise food consumption venues
- Women aged 18-24 have eaten more at Western quick service restaurants
- Graph 7: on-premise food consumption venue, 2024
- Multi-generational families prefer LSRs
- Graph 8: on-premise food consumption venue – respondents who have eaten more at LSRs, by living situation, 2024
- Western foodservice brands should continue store expansions in Tier 3 or lower cities
- Graph 9: on-premise food consumption venue – respondents who have eaten more at selected restaurants, by city tier, 2024
- Regional dietary differences may inspire new business formats
- Graph 10: on-premise food consumption venue – respondents who have eaten more at selected restaurants, by region, 2024
- Consumption frequency by category
- Rice and noodles dominate as the most frequently consumed categories at LSRs
- Graph 11: consumption frequency by category, 2024
- Graph 12: consumption frequency by category, ranked by penetration rate, 2024
- Western-style restaurants need to include a certain percentage of Chinese-style meals
- Graph 13: consumption frequency by category – Chinese/Asian dishes, by respondents with increased consumption frequency at western-style quick service restaurants, 2024
- Graph 14: consumption frequency by category – Chinese/Asian dishes, by respondents with increased consumption at western casual dining restaurants, 2024
- High-income and highly educated consumers consume Western-style dishes more frequently
- Graph 15: consumption frequency by category – high-frequency consumers, by monthly household income, 2024
- Graph 16: consumption frequency by category – high-frequency users, by educational level, 2024
- Western dishes hold considerable potential in Tier 3 or lower cities
- Graph 17: consumption frequency by category – high-frequency users of Chinese/Asian dishes, by city tier, 2024
- Graph 18: consumption frequency by category – high-frequency users of western dishes, by city tier, 2024
- Menu interest
- A variety of vegetables is key to attracting consumers
- Graph 19: menu interest, 2024
- Provide multiple choices and pairings of staple foods for a healthy image
- Graph 20: menu interest – staple foods, by region, 2024
- Graph 21: menu interest – staple foods, by city tier, 2024
- Integrate more varieties of vegetables to burgers and launch Chinese-Western fusion products
- Graph 22: menu interest, by high-frequency users of selected categories, 2024
- Consumption occasions and ordering methods
- Ordering online through third-party apps and delivery is the norm
- Graph 23: consumption occasions and ordering methods, 2024
- Encourage younger consumers to order through official apps and improve the pick-up experience
- Graph 24: consumption occasions and ordering methods – ordered online through official apps/mini-program and picked up in stores, by age, 2024
- Graph 25: consumption occasions and ordering methods – ordered online through third-party apps (eg Ele.me) and delivery, by age, 2024
- Tier 1 and high-income respondents are more used to ordering through official apps/mini-programs and picking up in stores
- Graph 26: consumption occasions and ordering methods – ordered online through official apps/mini-programs and picked up in stores, by city tier, 2024
- Graph 27: consumption occasions and ordering methods – ordered online through official apps/mini-programs and picked up in stores, by monthly household income, 2024
- Appealing attributes
- Good value for money, healthier options and variety are the most important features
- Graph 28: appealing features, 2024
- The value of LSRs: healthy choice and consistent quality
- Graph 29: appealing attributes – second and third choices when 'value for money' as the first choice, 2024
- Graph 30: appealing attributes – top three first attributes, by monthly household income, 2024
- Launching meals with various portions and combinations to cater to different family structures
- Graph 31: appealing attributes – selected top choices, by family structure, 2024
- Information channels
- Chinese quick service brands need comprehensive operational strategies on social media platforms
- Graph 32: information channels, 2024
- Graph 33: information channels, by respondents with increased consumption frequency at selected restaurant types, 2024
- Harness online and offline platforms with different types of promotional content
- Graph 34: Information channels, by generation, 2024
- Graph 35: Information channels, by gender, 2024
- Graph 36: information channels, by educational level, 2024
- Focusing on short video platforms and increasing operations of WeChat official accounts can effectively reach more consumers
- Attitudes towards LSRs
- Focus on workday lunch occasions and leverage daypart-based marketing to drive performance
- Graph 37: attitudes towards LSRs – positioning of restaurants, 2024
- Capitalise on good value for money to attract consumers with no specific brand or category preferences
- Enrich menus while preserving classic choices
- Graph 38: attitudes towards LSRs – menu design, by city tier, 2024
- Graph 39: attitudes towards LSRs – menu design, 2024
- Increase visiting frequency with products prepared and sold on premise
- Graph 40: attitudes towards LSRs – product quality, 2024
- Chain brands could highlight their advantages in speed, convenience and consistent quality
- Graph 41: attitudes towards LSRs – comparison between independent and chained LSRs, 2024
- Graph 42: attitudes towards LSRs – comparison between independent and chained LSRs, by monthly household income, 2024
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Issues and insights
- Fusion, customised and derivative burger launches better cater to consumer needs
- Fusions create new product formats
- Offer personalised options to better meet personal preferences
- Diversify with derivative products and ways of eating
- Compound or split segmented businesses to optimise operational models
- Multi-brand operations of established foodservice companies
- Compound operations more suitable for the current Chinese market
- Developing new business formats: from selected time to all dayparts, from Tier 1 to lower tier cities
- Improve transparency and market communication to address consumer concerns
- Consumers have an overall positive impression of LSRs
- Apart from implementing food safety control, market communication is equally important
- More positive sentiment on social media after Original Chicken released traceability report
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Appendix – market size and forecast, research methodology and abbreviations
- Market size and forecast
- Methodology
- Abbreviations
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