Breakfast Market Attracts Branded Catering Franchises in China

Breakfast in China usually costs little for common citizens. The market is usually dominated by small snack counters which line the streets, but now a number of prominent restaurant chains have edged into the competition, trying to grab a share of a market which possesses huge potential.

Let's take a closer look with our reporter Liu Min.

A bowl of porridge, a dumpling and an egg makes up Wang Lei's breakfast in a Beijing based franchise restaurant, costing her five yuan and fifty cents. She says the price is only a little higher than the small stands which can be found on the streets.

"I think the cost is similar to the small restaurants, with only one or two yuan difference."

The breakfast market has great potential, and as more consumers pay greater attention to the issues of hygiene and nutrition, catering chains in China are able to gain more business. However, Tian Pengcheng, a manager of Jiaheyipin Catering Company in Beijing says the profit generated from breakfast services is actually quite low.

"Our purpose is to provide economical offers at a cost-level price to lure customers in. But they can also enjoy good service similar to high end hotels. We've also prepared some delicate Guangdong snacks as other choices."

But why would these restaurants want to be involved in an area of business considered to be unprofitable? Manager Tian Pengcheng provides us with a simple break down of the situation. The rental fee for the premises doesn't change, whether the restaurant is in use or not during the morning. The cost of labor can be covered by the profit made during the lunch and dinner time periods every day. Usually, breakfast snacks are purchased elsewhere and delivered by the wholesalers. Tian Pengcheng says the benefit of the seemingly unprofitable breakfast business is that it usually brings them more loyal customers.

"Those who eat our breakfast may become faithful customers. For example, a customer may come for breakfast ten times, and then one day he may decide to come for dinner."

According to a report released by the China Catering Industry Association, 33 percent of consumers within large cities usually have breakfast outside more than 20 times every month. A further 31 percent would eat outside five to ten times. The breakfast market is growing at a rate of 14 percent every year since 2009.

Local governments in major cities have provided support to some famous restaurant to serve healthy breakfast to residents. Chains like Jiaheyipin, and Meizhoudongpo have received as much as four million yuan financial support to develop this part of the business.

Other Chinese fast food restaurants, such as Hehegu and the Chinese Kongfu, have also joined the competition. Liu Bo is a manager of Chinese Kongfu Restaurant.

"The market for lunch, dinner and late-night snacks has been fully explored. For us, the breakfast market is unexplored territory with great potential for growth."

Small food stands can provide quick take-away breakfast, beating restaurants in prices and convenience. Considering this, those chain restaurants have now started to prepare breakfast combos priced at five to ten yuan each to sell at the entrance of their restaurants or near bus stations in the hope of cornering the market completely.

For CRI, I'm Liu Min.