In 2020, Quanjude lost all the profits of the past three years and, for the first time in the 17 years since the long-established roast duck restaurant was listed, it lost money.
On the evening of April 23, Quanjude announced its 2020 annual report, and the decline in revenue and net profit became unsuspecting. Annual revenue was 783 million yuan, down 49.99% year-on-year; net profit attributable to the parent company was -261 million yuan.
Whether the decline in customer traffic is continuing or not, Quanjude did not say. The annual report shows that from 2017 to 2019, the number of guests in Quanjude’s catering business fell from 8,040,700 to 6,589,200, and by 2020, Quanjude simply omitted this set of figures from its annual report.
From the elimination of service charges, reduced prices of dishes to live streaming of goods, under the rule of the new “boss” – the former general manager of Dong Lai Shun, Zhou Yanlong, Quanjude in 2020 “live” a lot, but The average loss of 50 million per quarter to start with, until 2021 also failed to change.
Rarely negative gross margin, opening = losing money
The epidemic is the “black swan” of all the restaurant industry in 2020. Quanjude itself also gave a corresponding explanation: in 2020, the sudden outbreak of the epidemic has seriously affected the catering industry, with all kinds of dinners, wedding banquets and other activities almost completely cancelled, and a large number of catering stores ceased to operate, putting the entire catering industry under tremendous pressure.
In the world of roast duck, Quanjude with “hanging oven roast duck” and the “stewed oven roast duck” of the cheap place to form two very different styles, which has become the “trick” of Quanjude. A deep and wide oven, with a mouth without a door, a man-high oven, roast duck as you order, roast on one side and continue on the other, relying on this handed-down craft for a hundred years, Quanjude is naturally “famous and not worried about business. At the beginning of this century, there was even a 100-meter-long queue outside the front door of Quanjude.
However, a roast duck 298 yuan, a tie of watermelon juice 168 yuan, in the eyes of many diners, Quanjude is undoubtedly “cut leeks” general existence. Even now the price of roast duck has been reduced to 238 yuan a, but also failed to restore the hearts of diners.
Let the diners disappointed not only the price, but also the service is not in place. Some diners complained that they wanted a few boxes of roast duck, but the service staff replied, “The boxes don’t cost much, if you buy I’ll show you.” This is such a service, but also charge 10% or more service fees, diners naturally will not buy.
On the public review, the top ranking is Beijing Hua Yan Yun, the four seasons Min Fu and other stores, are above 4.9 points, while the Quanjude ranking relatively high Xitieying Wanda Square store only 4.77 points, not very outstanding.
Tourists don’t come, and locals don’t feel like they have to be Quanjude. “We go to Quanjude occasionally, and the duck can be eaten anywhere, and now it all feels pretty much the same.” A Beijing resident told reporters.
What’s worse is that the “hanging oven” is not a crushing presence in the duck world anymore. Feng En-aid, chairman of the Chinese Cuisine Association, once publicly shared a tasting experience in which a roast duck restaurant put out two ducks, one roasted in an electric oven and one in a hanging oven, and invited him and the professionals to taste and evaluate them. “Professionals can’t even taste the difference, let alone ordinary customers?”
Instead of saying that the epidemic is the “black swan” of Quanjude, it is the “magnifying glass” of Quanjude’s own malpractice. The magnification has been the reputation crisis that Quanjude has been experiencing.
The annual report shows that Quanjude’s restaurant business revenue in 2020 was 529 million yuan, down 53.58% year-on-year. By region, the revenue share of North China was 89.64%, compared to 100.37% in 2019.
This means that Quanjude, before the epidemic, was still relying on Beijing as the representative of North China to bear losses for the rest of the region. After 2020, the sharp decline in diners makes it impossible for Quanjude to make enough money, even in Beijing.
In 2020, Quanjude’s gross margin for its restaurant business reached -20.32%, while in 2019 this figure was still 66.65%. According to this figure, Quanjude has essentially fallen into the situation of “opening = losing money” in the past year.
Moreover, the momentum of Quanjude’s loss seems to have not ended. On April 14, Quanjude released a preview of its first quarter 2021 results, estimating net profit attributable to shareholders of the listed company to be -48 million yuan to -46 million yuan. It also said that due to the impact of the epidemic in the first quarter of 2021, the company’s stores and food sales in Beijing recovered slowly, resulting in a loss in the company’s operation in the first quarter.
Very spirited, but so far only touched themselves
An announcement on Dec. 3, 2019, announced that Quanjude had replaced its “boss”, with Zhou Yanlong, the former general manager of Donglaishun, reassigned as general manager of Quanjude.
Zhou Yanlong once publicly introduced his experience in Dong Lai Shun, in terms of cuisine, from product structure to plate, seeking some close to the netroots and close to the “post-80s” and “post-90s” consumer trends. In terms of technology, we are trying to achieve the “original taste” by vigorously promoting hand-cut meat products that meet the non-heritage standards.
In an interview with the media in March 2020, Zhou Yanlong, General Manager of Quanjude, explained the two “shortcomings” of Quanjude: one was the lack of attractiveness to young consumers and the other was the lack of attractiveness to local consumers.
One is that the age group of our main consumers is 8-10 years older than that of our main competitors; the second is that the age of our operation team is also 10 years older than that of our competitors. “
Eliminating service charges and lowering prices on dishes were the first things Quanjude did to turn around its reputation in 2020.
In the 1990s, the Ministry of Domestic Trade (now part of the Ministry of Commerce) named Quanjude a “National Special Grade Restaurant” and it was approved by the Beijing Tourism Bureau as a designated tourism unit, which allowed Quanjude to charge a service fee of up to 15 percent under relevant regulations.
With the status of a “national banquet” of the Communist Party of China and the signboard of “designated tourist spot”, Quanjude has been running wild on the road of high-priced dishes and service fees. In the past 20 years, Quanjude has been on the court docket more than once because of service charges, but it had never lost a case until it announced the abolition of service charges.
According to reports, Quanjude has given up at least 40 million yuan in revenue after the abolition of service fees. At the same time, Quanjude promised to reduce the prices of relevant dishes by 10%-15%, but Zhou Yanlong admitted that some of the dishes were “reduced in quantity and price”, i.e. the quantity of dishes was relatively reduced at the same time as the price was reduced, the reason being to avoid waste.
Another initiative is live with the goods, Quanjude annual report shows that the company tried live with the goods, using the four brand store celebrations for multiple live, Quanjude store celebrations live exposure up to 30 million, a 483% increase week-on-week.
This is seen by Zhou Yanlong as a good opportunity to get close to young people, and in the Jingdong live broadcast on June 15, 2020, Zhou Yanlong took the head chef of roast duck at Quanjude’s Beijing Qianmen store out on camera to perform live manipulation of razor blade duck. And connected to the store’s Quanjude roasting oven to explain the production process of roast duck. One hour into the broadcast, it brought 100,000 additional fans to Quanjude’s Beijing East flagship store.
There is also a road is to try to turn into “Zhouhei Duck”. The reporter combed through the annual report and found that for both products and services Quanjude has already had a detailed operation. In terms of products, 2020 launched a new duck sauce, smoked duck, sea duck eggs, for young consumers, e-commerce channels to create eight duck casual snack products, combined with the traditional culture of old Beijing to create a strong regional cultural color of Ai Wo Wo, Long Shu crisp and other two Beijing snack products. Other products include egg yolk crisp, duck meat crisp and moon cake gift box.
In the 2020 annual report, Quanjude mentioned the rise of post-95 and post-00 consumption, the gradual upgrading of consumption concepts, the rich demand for scenes and products, and the social gathering becoming an important demand for food and beverage consumption.
In terms of service, Quanjude deepens monthly assessment, the completion of financial indicators of store operators is linked to their personal income monthly, the annual management indicators and financial indicators are double-assessed, and the business operation team is given big incentives for over-achieving performance.
Only, so far, Quanjude’s initiatives have not been able to play out on revenue, in front of Dadong, Four Seasons Minfu and even Cheap Square, which is a street away, Quanjude has only moved itself for the time being.
To turn the tide, who else can Quanjude learn from?
Less 3 roast duck stores, more 2 Sichuan cuisine restaurants, this is Quanjude’s store report card in 2020.
The annual report shows that by the end of 2020, the company opened a total of 117 food and beverage stores in Beijing, Shanghai, Hangzhou and Changchun, including 107 Quanjude brand stores, 1 imitation restaurant brand store, 5 Fengzeyuan brand stores and 4 Sichuan restaurant brand stores.
Compared to the level at the end of 2019, the Company had a total of 118 food and beverage stores in Beijing, Shanghai, Hangzhou and Changchun, including 110 Quanjude brand stores, 1 Imitation Cuisine brand store, 5 Fengzeyuan brand stores and 2 Sichuan Restaurant brand stores.
One of these closed stores is located in Daxing, Beijing. According to the annual report, on May 22, 2020, Beijing Juchengde Restaurant Management Co., Ltd, the operator of Quanjude Beijing Daxing Store, was declared bankrupt by the Beijing No. 1 Intermediate People’s Court due to its inability to pay off its debts as they fell due and its insolvency.
In addition, the insolvent takeaway platform, Beijing Duck Technology Co., Ltd. was ruled bankrupt by the Beijing No. 1 Intermediate People’s Court on December 25, 2020 due to its inability to pay off its debts as they fell due and its insolvency. From its launch in late 2015 to its closure in 2017, Quanjude’s self-built takeaway platform survived for just over 1 year.
According to the Chinese Long-established Brand Development Index (2018), only 10% of the 1,128 Chinese long-established enterprises recognized by the Ministry of Commerce are thriving, and many are operating in crisis. Insufficient power of product innovation, outdated organizational structure and lack of human capital have become the top three obstacles to the development of old-established enterprises.
For Quanjude, the exit of Gogu from the capital a month ago is a lesson learned from the previous experience of old-fashioned companies.
On March 31, 2021, the Beijing Qianmen store was closed due to the expiration of its lease, and the Wangfujing store, which was previously discharged from the franchise because of “calling the police if customers give bad reviews”, has no stores outside Tianjin.
It’s no secret that Dog Do has been trolled. In the early years, some people trolled the Tianjin Dog Do buns, and the price of 8 small buns is 100 yuan, and the price of a single bun is between 12-16 yuan, which is called the “LV” of the bun industry.
Tao Haixiang, CEO of Guangzhou Turning Point Enterprise Management Co., Ltd. argued in a media interview that, like Quanjude and Tianjin Goubu Baozi, the most prosperous era of these old brands has passed, and the dividends are gradually diluting and fading.
Tao Haixiang also believes that traditional categories and old brands have natural advantages, and there is hope to do it with care, but the premise is to completely break the inherent perception, put their own body down and return to the origin of the restaurant.
In people’s impression, the old restaurant brings culture, atmosphere, craftsmanship, taste expectations, pay for the party to become a matter of course.