Why Do Celebrities Open Hot Pot Restaurants? Are Profits Really That High?

明星为什么都爱开火锅店?是利润特别高吗

From: 每经网 2016-10-18 11:05:46

As the weather gets colder, business at hot pot restaurants is picking up again.

After they get famous and have money, many stars choose to invest in businesses, predominantly choosing restaurants, of which hot pot restaurants are their favourite. So, why do stars like opening hot pot restaurants?

Is it because hot pot restaurants don’t require chefs, are easy to replicate, or because they make lots of money?

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Famous people love to invest in hot pot restaurants

Hai Di Lao has always been a legend in the hot pot industry; however, more and more businesses are entering the market. Local brands in each city have their own take on the traditional hot pot. New hot pot concepts are specifically designed for young consumers. Add to this people in the entertainment business who have come to try their luck at opening a store and being a boss. Competition is fierce in the hot pot business. 

Rough statistics show that these stars have all invested in, or are in the process of opening, hot pot restaurants: Wu Qilong, Ren Quan, Li Bingbing, Huang Xiaoming, Zeng Zhiwei, Bao Bei’er, Qi Qin, Xue Zhiqian, and the star of famous TV show “ipartment”, Tang Youyou.

So how high are the profits in the hot pot business? Of the restaurants on the China Cuisine Association top 100 list in 2015, average net profits were 4.8%. Among which, the net profits for hot pot restaurants languished at the bottom at 2.3%, even worse than boxed lunches and western food.

Take for example the hot pot capital Chongqing, where currently the average cost is 50-70 RMB, and this amount has not changed for years. In cities outside Chongqing, the average cost is 80-120 RMB. Rising costs of raw ingredients, salaries, and rents, mean profits at Chongqing’s hot pot restaurants are increasingly weak.

The Secretary of the Chongqing Hot Pot Association Li Qianhui said, Chongqing has 30,000 hot pot restaurants and nationally there are 50,000 Chongqing hot pot restaurants. Since last year, a large number of well-established Chongqing hot pot restaurants have sought to expand their empires nationally, at the same time a whole bunch of new hot pot brands sprung up like bamboo shoots after the rain. Thus it’s not hard to see how competition amongst Chongqing hot pot restaurants was fierce, and profits were at new lows.

What are the advantages of hot pot compared to other foods?

If profits are weaker than in other industries, why are celebrities clamouring to enter the market?

Some netizens say that it is easier to manage a hot pot restaurant. You don’t rely on the kitchen and aren’t held hostage by the chef. Whether hot pot is good or bad depends on the ingredients, and this makes it the easiest model to replicate. The main advantage is that it is suitable for all ages–hot pot will be popular anywhere as long as there are Chinese people. Northern boiled mutton, Sichuan tripe, coastal seafood are all top foods. However, hot pot restaurants are easy to franchise and the management model can be transferred directly to another branch.

Other netizens say that hot pot restaurants are easy to run and don’t need much effort. You don’t need many people, you don’t need to employ chefs, just heat the ingredients and the flavours are there. As long as you have all the additional foods to add to the hot pot, diners can order whatever they want to eat. They can adjust the flavour however they like it. If they adjust it well–it will taste great, if they adjust it badly they can’t say the hot pot flavour was bad–it all depends on their own skill. As regards celebrities, investing in the food and beverages industry has the least risk, the lowest capital requirements, and a good reputation, then add the star effect and business will usually take off.

That so many celebrities have succeeded in opening hot pot restaurants demonstrates the advantages of hot pot. Specifically:

1. The work at hot pot restaurants isn’t as complicated as that usually required by Chinese restaurants. Hot pot’s advantage is that it is quick, has a lower workload, and has no artistry in preparation.

2. The flavour of hot pot is distinctive. High-level hot pot of course emphasises a bright red colour, peppery flavour, delicious taste, fragrant smell, and a pleasing after taste. Young people also like their taste buds to be challenged, and this group are driving consumption.

3. The way of eating hot pot facilitates talking and drinking alcohol. There is a strong communal spirit to eating hot pot, everyone joins together, and there’s no need for formality. Food stays hot from start to finish. The atmosphere is warm and friendly.

4. Don’t think that hot pot is affected by the seasons and only has one variety. Now hot pot styles have diversified—spicy, sour, fragrant, light, ones cooked over an open flame, others on an electric hob, ones with soup, others without, add to this cold dishes and appetisers, and you can see how investors position themselves in the market. 

So while the profits are low, the advantages of opening a hot pot restaurant are high.