Circana releases latest report on the foodservice market in China

SHANGHAI, May 1, 2023 – After the economic drawback caused by government COVID-19 restriction policies across China in the first half of 2022, there was a significant rebound of foodservice traffic in the third quarter of last year. However, this growth was short lived as the market faced a decline in the fourth quarter (Q4) due to a large outbreak of the disease, resulting in a downward trend in retail sales and GDP, particularly in December, according to Circana Market Intelligence, formerly IRI and The NPD Group.

Per the latest “China Foodservice Market Sentiment Snapshot” from Circana, the impact of the outbreaks and subsequent lockdowns in 2022 was severe across the 22 cities tracked in China. Consumption and visits were down 11% and 13.3%, respectively, while the average eater check increased by 2.7% last year. With the sizable COVID-19 outbreak in the Q4, consumers dined out less frequently, avoiding contact with the public to stay safe. These behaviors that were comparable with what the industry had experienced during every lockdown throughout the pandemic.

When the surge from the latest outbreak ended in January 2023, consumer confidence substantially improved across the country, including consumer expectations for an increase in future household income. January 2023 was the first time in 12 months that income levels for more than half of consumers in China either stabilized or increased. To be specific, 52% stated their incomes had stabilized, while 8% experienced increases in pay.

The Chinese New Year occurred in January this year, so many consumers chose to cook at home due to holiday customs and the fact that many restaurants were closed for the holiday. However, nearly 30% of consumers planned to dine out more often in February, which was approximately 2.4 times the level reported the previous year.

“These numbers indicate great growth potential for the Chinese foodservice market, and we expect consumer enthusiasm to continue,” said Gimantha Jayasinghe, senior vice president of foodservice, APAC, Circana. “The recovery of channels is varying in pace and drivers since the market reopened.”