Summary of Conference Call on Prepared Dishes and the Development of China's Chain Restaurant Industry Industry Overview - The conference discusses the prepared dishes sector within the Chinese chain restaurant industry, highlighting the differences in definitions at consumer, industry, and national levels [1][2][3]. Key Points and Arguments - **Definition Discrepancies**: Prepared dishes are defined differently across various levels. National definitions exclude staple foods and dishes made in central kitchens, and prohibit preservatives [1][2]. - **Central Kitchen Benefits**: Chain restaurants utilize central kitchens to lower costs, ensure product quality consistency, standardize operations, and enhance food safety. However, initial processing or semi-finished products from central kitchens are not classified as prepared dishes under national definitions [1][3]. - **Japanese Influence**: The Japanese restaurant industry has optimized supply chains and food safety standards, establishing a robust system for central kitchens and cold chain logistics, which serves as a model for China's restaurant sector [1][4]. - **Consumer Expectations**: Chinese consumers expect healthy, safe, and innovative menu options from Chinese cuisine. Chain restaurants should enhance supply chain management, improve service levels, develop new products, and focus on brand building to meet these expectations [1][5]. - **Impact of Central Kitchens**: Central kitchens significantly influence the Chinese restaurant industry by improving efficiency and enabling standardized processes, making it easier for new brands to emerge [1][7]. - **Prepared Dishes Classification**: Prepared dishes are categorized into four types: pre-processed ingredients, ready-to-cook, semi-finished products requiring heating, and fully cooked dishes. Central kitchen products do not fall under the prepared dishes category as per the latest regulations [2][6]. - **Market Changes Post-Regulation**: Following new regulations in March 2024, which excluded central kitchen products from the prepared dishes category, consumer confidence in non-central kitchen prepared dishes declined, leading to a rebranding of some products as "quick dishes" [2][13]. Additional Important Insights - **Central Kitchen Types**: There are two main types of central kitchens: those with production licenses that can supply third-party restaurants and those that only supply their own outlets [8][12]. - **Future Trends**: The trend towards central kitchens and prepared dishes is expected to grow, especially as family sizes decrease and younger parents may prefer convenient meal options. Ensuring safety and taste will be crucial for market acceptance [16][17]. - **Technological Integration**: The use of cooking robots is anticipated to enhance the quality of prepared dishes while maintaining standardization, addressing the challenge of flavor consistency in mass production [19]. - **Profitability Comparison**: The profit margins in the Japanese restaurant industry are generally lower than those in China, suggesting that Chinese restaurants have room to balance pricing while maintaining profitability through central kitchen efficiencies [20][21].

Group 1 - The younger generation is increasingly skeptical about the notion that "low prices are king," as they experience dissatisfaction with low-quality products and services [1][6] - Consumers are shifting towards "no-brain shopping," which emphasizes quality and convenience over low prices, leading to a preference for reputable stores like Hema [6][11] - The trend of "no-brain shopping" is gaining traction across various consumer sectors, with individuals opting for quality over price in clothing, food delivery, and grocery shopping [6][12] Group 2 - The retail industry is entering a phase focused on quality selection, with a significant increase in the number of private label products being developed by retailers [22][24] - Hema's internal standards for product selection and introduction frequency are notably higher than industry averages, reflecting a commitment to quality [24][26] - The demand for healthier and functional food products is reshaping the new retail food consumption market, with consumers seeking a balance between health and taste [20][29] Group 3 - Hema implements a "lifetime responsibility system" for product selection, ensuring accountability throughout the product lifecycle, which is crucial in a competitive retail environment [32][33] - The company emphasizes meticulous attention to detail in the supply chain, from sourcing to transportation, to maintain high product quality [35][37] - Hema's commitment to quality has resulted in significant sales success for its products, demonstrating the effectiveness of its rigorous selection and quality assurance processes [37]

Group 1 - Hema Fresh announced an ambitious expansion plan to add nearly 100 new stores and expand its business coverage to over 50 new cities within the fiscal year, aiming to surpass 500 total stores [1] - CEO Yan Xiaolei expressed confidence in the vast potential of China's domestic consumption market, emphasizing the core mission of meeting consumer demands for a better life and the importance of quality products and excellent service as key competitive advantages [1] - In the past year, Hema adjusted its business focus to concentrate on Hema Fresh and community discount stores, gradually exiting exploratory projects like X membership stores, leading to rapid expansion in cities such as Taizhou, Suzhou, Tianjin, Tangshan, and Suining [1] Group 2 - Hema ranked among the top three in the "2024 China Supermarket Top 100 List," marking a new growth phase and solidifying its position as a benchmark enterprise in China's retail sector [2] - Since opening its first store in Shanghai in 2016, Hema Fresh has redefined supermarket standards with its unique offerings, including seafood, short-shelf-life fresh products, quick-cook meals, self-checkout, and an integrated online-offline business model [2] - As of the end of March this year, Hema had established over 420 stores across more than 50 cities in regions such as North China, East China, South China, and Southwest China, demonstrating strong market appeal and brand influence [2]

Core Viewpoint - Dingtalk Grocery has formed a strategic partnership with DFI Retail Group to create a digital cross-border supply chain system, aiming for a sales target of 100 million HKD in the first year of collaboration [1][4]. Group 1: Partnership Details - The partnership will leverage DFI's network of nearly 280 Wellcome supermarkets in Hong Kong to provide a variety of quality products to consumers [1][4]. - The first batch of six selected vegetables from Dingtalk Grocery was launched on April 9, with total sales exceeding 100,000 kilograms within a month [4][6]. - The vegetables include varieties such as romaine lettuce, oilseed lettuce, and bok choy, sourced from Dingtalk Grocery's direct supply bases in mainland China [4][6]. Group 2: Supply Chain and Technology - Dingtalk Grocery and DFI plan to implement an "one vegetable, one code" traceability system, allowing consumers to access planting records and inspection reports via QR codes [4][5]. - An AI prediction system will be developed to optimize inventory management across DFI's supermarkets, adjusting supply based on factors like weather and holidays [5][6]. Group 3: Future Expansion Plans - The partnership aims to introduce additional products, including popular and regional specialty vegetables, with a target of over 150 SKUs by the end of the year [6][7]. - There are plans to extend this collaboration model to DFI's supermarkets in Macau and Cambodia, reaching more consumers [6][7]. Group 4: Company Performance - Dingtalk Grocery reported a revenue of 23.07 billion CNY in 2024, a year-on-year increase of 15.5%, and achieved a net profit of 300 million CNY, marking a turnaround from a loss in the previous year [8]. - The company emphasizes the importance of supply chain investments, with a direct sourcing ratio for fresh products stabilizing around 85% [8].