Breakfast brings trillions of business opportunities

"Good morning, world."

Have you had breakfast? This may be the first social greeting you and I hear every morning.
In the documentary "Breakfast China 4", a short seven or eight-minute episode focuses on the streets and alleys of various cities in China, leading the audience to search for those seemingly insignificant breakfast delicacies, and detailing the ordinary and touching stories behind each delicacy.

As we all know, China's food culture is extensive and profound, and Chinese people are more particular about eating breakfast. There is the Guangdong "morning tea" that pursues taste and refinement, the Wuhan "Guo Zao" that is lively and full of fireworks, and the Chongqing "small noodles" that are hot and refreshing.
For Chinese people, breakfast is not only a pursuit and yearning for food, but also gives a different sense of ritual in life. Eating a steaming hot breakfast can drive away yesterday's fatigue and face the challenges of the new day with full energy. A report from Mintel shows that in 2019, the scale of China's breakfast market has reached 1.8 trillion yuan. In 2020, due to the impact of the new crown epidemic, the growth rate of the industry slowed down. It is expected to continue to grow at a compound growth rate of 7.7% from 2020 to 2025, and it will reach 2.6 trillion yuan in 2025.
Not long ago, FDL Digital Food has discussed the night economy of the food industry with everyone. I believe that in the current huge trillion-dollar breakfast market, there are also a lot of knowledge and business opportunities to be discovered. What kind of market is it? What are the category selections and players that are worth paying attention to?

01 Breakfast culture has a long history

“A day’s plan begins in the morning”, breakfast is the most indispensable part of every Chinese person’s day, and the imprint of breakfast culture has been updated from ancient times to the present, and each era has different breakfast dietary characteristics. From the origin of breakfast culture, Andrew Doby, the author of "The Book of Breakfast", once gave a more convincing speculation, he believed that breakfast was a product of the Neolithic Revolution.

Because the planting and animal husbandry technology brought by the Neolithic Revolution freed people from their primitive hunting life, they began to learn to preserve food materials such as pickled meat and cheese, which is a prerequisite for enjoying breakfast leisurely.
In China, the earliest historical records of breakfast can be traced back to the Shang Dynasty. The Shang merchants who had two meals a day divided a day and night into eight periods, among which "big food" refers to the time for breakfast, which is roughly from 7 to 9 o'clock; "small food" refers to the time for dinner, which is generally from 15 to 17 o'clock. The function of "big food" is to store sufficient calories in advance for a day's heavy physical labor, so breakfast is more important than dinner. By the Sui and Tang Dynasties, people's material conditions had greatly improved, and the folks had formed a tradition of "three meals a day" with breakfast, lunch and dinner as the main food. Han Yu, a poet in the Tang Dynasty, once wrote in a poem: "Breakfast does not fill the stomach, and winter clothes can cover the iliac joints." The importance of breakfast is self-evident.
In the Qing Dynasty, when the Manchus entered the country, the Qing Palace called the main meal "Shan". The "Shan Di Dian" records that breakfast is generally at 6:30 am and dinner is at 12:30 pm, with "dim sum" in between. As one of the most solemn main meals, "Breakfast" must include ten parts: pot, hot dishes, cooked food, steamed dishes, pickles, staple food, porridge and soup, desserts, special dishes and auspicious dishes. According to the Shan Di Dian of Emperor Guangxu on the first day of the first lunar month in 1895, there were as many as 35 dishes served for breakfast that day.
In modern times, the eating habits of different regions in China have gradually emerged, making the development of breakfast tend to be regional, with differences in the east, south, west and north.

02 New and old battle, rich connotation

In my country's catering ecology, breakfast has always been a high-frequency and rigid business. Despite this, breakfast is still keeping up with the pace of the times, constantly enriching its connotation, and continuously releasing new ideas.

1. Traditional breakfast: seeking innovation and change

Chinese people are good at flexibility in daily life, but they are quite "stubborn" in taste memory, especially the first meal of the day, as if only the breakfast sold by the old store or small vendors near home is the most appetizing.
This also makes the traditional Chinese breakfast market in my country with regional characteristics in a scattered and free state for a long time. There is no representative brand that has unified the country so far. Even the "first steamed bun stock" Babi Mantou, which was once listed with 3,000 franchise stores, has only conquered the Jiangsu, Zhejiang and Shanghai regions. In a strict sense, it is not a national chain brand. Although breakfast is likely to be the meal with the lowest customer unit price in a day, according to the Mintel report, the sales of the breakfast market for eating out are expected to exceed 840 billion yuan in 2021, with an average annual compound growth rate of 7.4%.
As a result, this extremely attractive market has also attracted many traditional Chinese breakfast shops to gradually begin looking for new ways out.

2. Cross-border players: Dividing the market

Once, traditional breakfast shops firmly controlled my country's huge breakfast catering market, but with the rapid advancement of digitalization and urban commerce, many mobile breakfast carts or small breakfast shops have gradually withdrawn from the business circle, and the market gap formed by this has just given many cross-border players who have entered the breakfast track an important opportunity. Many convenience stores, Western fast food brands, and chain catering brands have increased their stakes and divided the trillion-level breakfast market.
Convenience stores represented by 7-11, FamilyMart, Lawson, etc., relying on the huge offline store layout and fast and convenient attributes, sell a variety of steamed buns, tea eggs, soy milk, sandwiches, coffee and other breakfast categories that are in short supply, as well as pre-prepared dishes such as rice rolls, pasta, and porridge. Standardized taste, convenient and hygienic stores and affordable pricing have made convenience stores quickly become the breakfast choice for many working people. According to public reports, consumers who buy breakfast in convenience stores in my country currently account for 29%.
The most typical of foreign fast food are KFC and McDonald's. KFC chose breakfast as the initial foothold for implementing its localization strategy. It started with porridge in 2002, and later launched breakfast items such as cheese burgers, potato sticks, rice balls, soy milk and safe fried dough sticks in order to seize the market.
At the same time, KFC also deeply explored the "regional cuisine" of China. Since 2021, it has launched the "Good Morning·City Taste" promotion plan, launching meals for special breakfasts in different regions, aiming to make breakfast delicacies in various places no longer restricted by region.
This not only reflects KFC's respect for the cultures of different regions in China, but also helps it launch items that are more in line with users' eating habits, expand more abundant breakfast consumption scenarios, and give it more localized connotations.

03 Seize the scene and make a difference

In fact, Chinese people who are busy running around during the day often have breakfast in a hurry for ten minutes. There are two most common solutions - one is to buy it on the way to work, and the other is to finish it quickly at home, or milk and cereal, or quick-frozen buns and bagged bread, etc.
The market share of the former consumption scenario has now been almost divided by traditional breakfast shops, foreign fast food or convenience stores, and the overall trend has stabilized. On the contrary, with the general environment of staying at home due to the epidemic in recent years, coupled with the rationality of returning to mass consumption under the downgrade, the scene of home breakfast has become more and more a "battlefield" for major pre-packaged brands. According to Mintel's 2021 data, home breakfast accounts for 62% of the total consumption of breakfast food by Chinese consumers, and the estimated capacity of the home breakfast market is about 1.21 trillion yuan.
In this way, in the current fierce competition, what differentiated responses can brands make if they want to seize the favor of more consumers? Combining the latest consumption trends and breakfast product dynamics in domestic and foreign markets, FDL Digital Food advocates summarizing three major innovation levels to provide some reference for the industry.