According to Zhitong Finance APP, recently, the Peking Municipal Market Supervision Administration released the food safety sampling inspection announcement (2024 No. 73), showing that JIUMAOJIU (09922) subsidiary Tai Er Sauerkraut Fish one store was fined for the presence of anionic synthetic detergent (calculated as sodium dodecylbenzenesulfonate) on the chopsticks.

Renowned food safety popular science influencer and national senior food inspector Wang Silu reminded that excessive use of detergent or insufficient and incomplete rinsing with water can lead to residues on dining utensils. Although anionic synthetic detergents have low toxicity, they can have long-lasting chronic toxic effects on the body, and long-term intake may harm the gastrointestinal digestive system, skin, liver, etc., and may also increase the risk of allergic problems.

In recent years, many consumers have complained that the dish portion sizes at Tai Er Sauerkraut Fish are "much smaller than before," and both table turnover rates and per capita consumption have declined, with a reduction in the number of stores. The parent company of the Tai Er brand, JIUMAOJIU, is also facing difficulties, as its net income plummeted by nearly 70% in the first half of the year. JIUMAOJIU, which owns well-known chain dining brands like Tai Er Sauerkraut Fish and Song Hotpot, seems to be falling into a "cold winter."

Both per capita consumption and table turnover rates are declining, and the popularity of Tai Er Sauerkraut Fish is waning.

As a dining brand that has been popular among young people in recent years, Tai Er Sauerkraut Fish entered a period of rapid expansion after opening its first store in 2015. After 2018, JIUMAOJIU shifted its business focus to the Tai Er brand. With the expansion of stores, from 2018 to 2023, the revenue contribution of the Tai Er brand to the group's overall revenue has increased from 30% to over 75%, becoming the company's core profit source.

For the dining industry, table turnover rates and per capita customer spending are very important indicators that can greatly improve store revenue efficiency. "Not accepting over 4 people", "no table sharing", "no additional seats"... To improve table turnover rates, Tai Er Sauerkraut Fish has once implemented many very "quirky" store rules. According to the 2019 Earnings Reports data, the table turnover rate of Tai Er Sauerkraut Fish was 4.8, meaning that one table would receive nearly 5 groups of customers in a day. In the same period, the "industry benchmark" HAIDILAO had a table turnover rate of 4.8, while XIABUXIABU had a rate of 2.6. Looking at the average customer spending, the positioning of Tai Er, as a sauerkraut fish category, is also higher than that of its peers, with the previous average spending consistently between 70 to 80 yuan.

However, in recent years, the turnover rate, same-store sales, per capita consumption, and operating profit at the shop level of TAII have all declined. Compared to the first half of 2023, the turnover rate of self-operated stores for TAII decreased from 4.3 to 3.8 in the first half of 2024. This is the lowest turnover rate since 2019, even lower than during the pandemic. Same-store sales fell from 2.021 billion yuan to 1.709 billion yuan, representing a 15.5% decrease in same-store sales for self-operated shops; per capita consumption dropped from 75 yuan to 71 yuan. The operating profit at the shop level decreased from 0.467 billion yuan to 0.311 billion yuan, with the operating profit margin at the shop level declining from 21.3% to 13.8%.

The decline in per capita consumption is attributed to TAII's use of a low stock price strategy to attract consumers, but consumers do not seem to be responding positively to this strategy. Many consumers reported that 'prices went down, but the portion sizes shrank as well', leading to numerous negative reviews on social media. Furthermore, in recent years, consumer awareness of pre-cooked food has gradually increased, causing many users to 'abandon' TAII's pickled fish.

The parent company JIUMAOJIU saw revenue growth in the first half of 2024, but net income plummeted by nearly 70%.

The parent company of the TAII pickled fish brand, JIUMAOJIU Group, is also facing difficulties. On the evening of August 23, 2024, JIUMAOJIU Group released its mid-year performance announcement, which showed that for the first half of 2024, it achieved revenue of 3.064 billion yuan, a year-on-year increase of 6.4%, while profit during this period was 67.97 million yuan, a sharp decrease of 71.5%. The per capita consumption and same-store sales data for its brands, which include TAII, Xiong Hot Pot, and JIUMAOJIU Northwestern Cuisine, are all showing a downward trend.

Regarding the lack of profit growth despite revenue increase, JIUMAOJIU explained that the comparable base from the first half of the year was relatively high, and consumer habits were affected by changes in the external environment, leading to a decrease in per capita consumption and turnover rates at company restaurants; at the same time, the company’s cost control measures lagged behind the decline in revenue, resulting in an expected negative operational leverage for the first half of the year. Additionally, asset impairment losses from properties, factories, and equipment during the first half of the year amounted to no less than 4 million yuan.

In the first half of 2024, JIUMAOJIU successively eliminated two sub-brands that did not meet profit expectations - 'That Uncle is a Chef' and 'Lai Meili Sour Soup Grilled Fish', lowered the average customer price for TAII and Xiong Hot Pot, and officially announced the gradual opening of franchise and cooperation for its brands, TAII pickled fish and 'Outside the Mountains' sour soup hot pot, hoping to accelerate expansion at a lower cost.

However, the dual decline in turnover rate and average customer price proves that lowering prices has not yet helped JIUMAOJIU attract more consumers, while the newly opened franchise stores in the first half of the year totaled only 5, indicating that progress has been slow.

JIUMAOJIU Executive Director and Board of Directors Chairman Guan Yihong admitted that the performance in the first half of 2024 was not good. He believes that JIUMAOJIU has currently lost its sense of market changes, and there have been missteps in response measures, leading to a sharp decline in performance in the first half of this year. Guan Yihong also pointed out that the group has already made some adjustments in the first half of the year, focusing more on core brands.

Dining consumption in 2024 appears to be "intertwined with cold and warm." The "cold" refers to a significant downturn in the mid-to-high-end dining sector, where the era of making quick money through fast in and out has passed, leaving many practitioners lamenting the arrival of a winter period. The "warm" aspect is represented by the rapid growth of consumer spending focused on cost performance, the strong rise of snack fast food, and the county-level sinking market becoming a new blue ocean.

A relevant person from the China Cuisine Association previously stated that the dining industry is experiencing a phenomenon of income growth without profit growth. The continuous escalation of price wars, homogenized competition, and cost pressures are several key factors causing the current situation of increasing revenue without increasing profit in the dining industry. Stopping price wars, shifting towards healthy competition, developing "digital + dining" to enhance value creation, strengthening talent development to improve the overall level of the dining industry, and increasing policy support to unleash dining consumption potential are crucial elements to overcome the challenge of revenue growth without profit growth.