In recent years, hot pot has developed rapidly in the Chinese catering market and has become the first choice for many consumers to gather. However, with the influx of a large amount of capital and the rapid increase in the number of hot pot restaurants, industry competition has become increasingly fierce. Faced with customer diversion and high cost pressure, more and more hot pot brands choose to cut prices to survive, setting off a price war. According to Baidu's hot search on November 8, this price reduction trend has attracted widespread attention.

Hot pot market size and competition pattern

Hot pot attracts a large number of customers with its diverse choices and lively dining atmosphere. According to the "2023-2024 China Hot Pot Industry Annual Development Report", the scale of China's hot pot market has reached 975.8 billion yuan in 2023, and it is expected to exceed the trillion mark by 2024. However, the hot market has also brought fierce competition. According to the statistics of Zhaimen Canyan, as of mid-October 2024, the total number of hot pot stores in China has reached 460,000, of which more than 160,000 new stores have been opened in the past year. Faced with increasingly diverted customers, hot pot restaurants have been reducing prices to attract customers in order to gain a foothold in the fierce market environment.

The rise of price reduction: a shift in brand strategy

The "China Hot Pot Brand Price Monitoring Report in the First Half of 2024" shows that 58% of hot pot brands reduced prices in the first half of the year, a phenomenon that reflects the hot pot industry's competitive strategy of "small profits but quick turnover". In May, Xiabu Xiabu announced a price reduction of about 10% for the new menu, returning to the price of the "old times". In June, Shuang Hot Pot Factory launched low-priced dishes to attract customers; and in July, Chen Jishun and Beef Hot Pot also announced a substantial price reduction, trying to bring about a consumption boom through more affordable prices. This series of price reduction measures reflects the current situation of intensified competition in the hot pot industry. Price wars seem to have become a consensus among brands to occupy a place in the market stock competition.

Previously, the average customer price in the hot pot industry has repeatedly set new highs. Well-known hot pot brands such as Haidilao and Banu have caused controversy due to their high prices, and customers have complained that they "can't afford it". Many consumers reported that a normal hot pot meal costs hundreds of yuan, which makes it difficult for some families to dine. According to the "2024 China Hot Pot Industry Big Data Research Report", the average customer price of hot pot rose from 55.2 yuan in 2019 to 68.8 yuan in 2023, but fell to 59 yuan in the first half of 2024. Although the average customer price has fallen, some consumers still think that the current hot pot price is high.

Price-sensitive consumption trends: changes in consumer mentality

Regarding the price reduction trend in the hot pot industry, the "21st Century Business Herald" analyzed that on the one hand, consumers have become more sensitive to prices in the current economic environment, and price reduction strategies have become one of the means for brands to maintain their competitiveness. "Huihui Delicious Notes" analyzed that as consumers pay more and more attention to cost-effectiveness, those hot pot restaurants with inflated prices but mediocre experience have gradually lost their appeal. Today, consumers' consumption concepts tend to be rational and pursue "value for money", which has also prompted hot pot brands to re-examine their price positioning in order to attract more consumers.

Price wars allow hot pot brands to attract more consumers in the short term, but in the long run, there are also potential drawbacks. As pointed out by "Huihui Delicious Notes", the profit margin compression caused by price cuts may affect the R&D investment and service quality of hot pot brands. This makes many consumers begin to worry whether the quality of hot pot will gradually decline in the price war. Some consumers worry that price cuts may lead to a decline in the quality of dishes, and "low-quality and low-priced" hot pot restaurants will find it difficult to attract customers for a long time.

The trade-off between the risk of price cuts and customer experience

Although many hot pot restaurants have reduced their prices, many consumers still feel that it is "expensive". Some netizens complained that a casual hot pot meal for a family gathering costs hundreds of yuan, which is "unbearable". In addition, some consumers questioned that the profit margin of hot pot restaurants is too large, and believed that price cuts are just to adjust the "inflated" prices back to a reasonable range. Some consumers pointed out that if price cuts lead to a decline in quality, the short-term success of hot pot brands will be difficult to maintain. "Low-quality and low-priced" dishes may result in a one-time transaction and it is difficult to attract repeat customers.

Consumers' sensitivity to price and expectations of quality have brought double pressure to hot pot brands. In order to win in the price war, hot pot restaurants must take into account both the quality of dishes and the service experience. Some hot pot brands try to reduce costs while continuously optimizing the food supply chain to improve the freshness and health of dishes. In addition, some hot pot brands have begun to increase customer interaction experience, attract customers through innovative marketing methods and store design, and let them find a balance between price and service.

The future of the hot pot market: the dual test of innovation and quality

The price war in the hot pot industry is undoubtedly a strategic adjustment made by the brand for survival, but it also faces considerable challenges in the future. As consumers pay attention to the trend of cost performance, hot pot restaurants need to find a balance between price and quality. In order to cope with the profit pressure brought by the price war, some hot pot brands have increased the innovation of the food supply chain in order to reduce costs while ensuring quality. For example, some hot pot brands reduce the intermediate links through the direct purchase model, reducing costs while ensuring the freshness and safety of the ingredients.

For consumers, cost performance is still an important indicator for measuring hot pot restaurants. Consumers hope to enjoy high-quality ingredients and good service experience at a reasonable price. For hot pot brands, how to maintain service quality, innovative dishes and store experience while reducing prices will be the key to survival in the future. Brands need to work harder on details to improve consumers' dining experience, rather than just relying on low-price strategies.

New survival rules for the hot pot industry

As an important part of Chinese food culture, hot pot is deeply loved by consumers. Faced with fierce market competition, hot pot brands have cut prices to meet consumers' sensitive needs for prices. However, behind the price war, hot pot brands are facing the compression of profit margins and the test of quality. To survive and develop in the fierce market, brands need to find a balance between cost-effectiveness and customer experience.

In the future, the hot pot industry needs not only price adjustments, but also continuous efforts in innovation and quality. Price wars may bring traffic in the short term, but long-term competitiveness still depends on high-quality dishes, reasonable prices and good service experience.