Iconic Peking duck chain Quanjude reports net loss amid pandemic slump

Chinese restaurant chain Quanjude, established in 1864 and famous for its signature Peking roast duck, has reported a net loss of 53.8 million yuan ($8.14 million) in the third quarter, its third consecutive quarter of losses since the COVID-19 pandemic hit.

• The quarterly loss represents a year-over-year fall in revenue of 203 million yuan ($30.7 million), although the company’s third-quarter revenue did increase 53.4% over the previous quarter’s.
• The company will inevitably post a net loss for the year even if the fourth quarter improves — the first year that the company, one of China’s most recognizable and successful restaurant chains, will have posted a net loss in more than five years.

Serving Beijing’s most recognizable dish at its nationwide locations, the 156-year-old restaurant chain is one of China’s official “time-honored brands” (老字号 lǎozìhào).

• The title, awarded by China’s Ministry of Commerce, recognizes long-standing and well-known companies that distinctly represent aspects of Chinese culture. But over the years, the time-honored brand has evolved little.
• “Quanjude’s presentation and management style are considered outdated by local Beijingers, especially the younger generation. The chain has not continued to develop and evolve its brand, and the increasingly competitive industry is leaving it behind,” Zhou Jianhua, a food and beverage industry analyst, told The China Project.

It’s not for want of trying:

• In 2016, Quanjude introduced a new platform called Xiaoyage — literally translating as “little duck brother” — which used patented techniques to deliver Peking duck rolls to customers through online ordering. The initiative received a poor response and ceased operations the following year.
• In 2017, the restaurant chain announced plans to acquire Tangcheng Xiaochu, a casual dining company that Quanjude hoped could help revamp its business model, but the deal fell through
• In 2019, Quanjude’s president and board member Zhāng Lì 张力 resigned amid the company’s declining performance. From 2017 to 2019, the company’s annual profits fell from 136 million yuan to 45 million yuan ($20.57 million to $6.81 million).

Quanjude isn’t the only time-honored brand in China having a challenging year. In September, the Tianjin-based restaurant brand Goubuli, known for its stuffed buns, raised eyebrows for attempting to suppress a customer’s critical review.