Here’s an idea for lunch: durian pizza, roasted eel pasta and a cranberry smoothie to wash it all down. It might not sound appealing to traditionalists but this menu, just one of many choices available at La Cesar restaurant, is the proof that the age of big data has dawned in China’s F&B industry.
The Guangdong-based chain, which launched to fame, or infamy perhaps, on that durian pizza in 2012 has been trying to find ways to stay relevant to the Chinese customer ever since. Now pushing 80 stores, with another 70 set to open by the end of 2018, CEO Chen Ning has abandoned all pretext of listening to chefs, consultants or other traditional sources of new food concepts. In their place, he has data. Data gleaned from search website Baidu about what foods and concepts are trending (via hot words), combined with the feedback of millions of customers posted on review website Dazhong Dianping, are leading Chen to his more far-fetched sounding creations. In return, he has received significant investment from marquee investors, including a RMB 60 million investment in 2015 from Sun Qian, a partner in Sequoia Capital’s China fund.
In an interview with Chinese website Jiemian, Chen drove this point home again and again: data is his new king for research and development, and data will rule his kitchen, regardless of purists, naysayers, and others who say tropical fruits don’t belong on top of a pizza. It’s a theme we’re seeing across China’s F&B industry, from the new cashier-less convenience store chain Xing, which we wrote about last month, to this latest iteration with Le Cesar: tech executives are entering the F&B space, and they are not beholden to the way things were done before. Chen, who graduated from the University of Electronic Science and Technology, prides himself on the fact that more than half of his senior management have internet backgrounds: a former assistant to Hewlett-Packard’s president; a data scientist from Huawei; a buyer from telecom firm ZTE.
Together, they generate a monthly trend report, based on reviews from customers in Shanghai and Shenzhen, the company’s primary markets, combined with data harvested by crawler software that collates food trends on the Chinese internet. So what new innovations has this method spawned? For one, it led the restaurant to pick up on the coconut trend in China, which they added to their signature durian pizza as well as their drink menu, in the form of a coconut water with chia seeds, another trending ingredient. It also led them to introduce the cranberry smoothie, after analysis in early 2017 showed that sweet and sour flavors would be popular over the summer. In 2016, China became the second-largest export market for US cranberries in the world.
If the process sounds ingredient-led, that’s intentional. Chen has said that the best ingredients are those that are unique and tell a “story”, and identifying those items are the goal of all the data analysis. This is backed up by restaurant sales, which show that La Cesar’s best-selling pizzas are topped with durian, the king of fruits; mango, a very popular fruit in China; eel, which draws on Japanese cuisine; and a variety of black truffle. The company averages one new product a month.
While the purists at The Silk Initiative might not be the intended audience for Chen’s durian pizza, his company, and specifically the store menu, are worth watching for those keen on understanding what food items are currently trending in China, and may be useful for brands playing in other categories, like dairy (with flavored milks and yogurts) or snack foods. Indeed, we have seen the coconut trend play out alongside La Cesar’s adoption of it (particularly in the coconut water market), and are now hearing from consumers keen to adopt healthy and/or functional foods like cranberries and chia seeds.
It was only ever a matter of time before the technocrats and tech-savvy young entrepreneurs began shaking up China’s food and beverage industry with big data, and that time is now. Ignore it – and the coconut, durian and mango pizza – and you may be missing a valuable source of consumer feedback and trend forecasting. Embrace it fully, however, and you may be constantly playing catch up with the non-stop cycles of China’s F&B industry.
So what’s a brand to do? Go full technocrat a la Chen or follow a consumer-led approach? The answer lies in between. Data, after all, is just data. More important than the data is the interpretation of that data, and that still requires the skill of those intimately familiar with current consumer tastes, who are able to balance the tech-driven approach with classical primary research. And here it’s worth pointing out that for every durian pizza — for every hit — there are bound to be a number of failures, and that ratio may be skewed if listening to data alone.
Want to understand if these are short-term fads or real innovations that will resonate with the consumer? Keen to apply a cultural lens to big data to see where the market may be heading? The Silk Initiative’s Product Blueprint and Market Monitor solutions can answer these questions for you, helping you sidestep expensive failures before you sink your R&D dollars into the latest fashion in the F&B market. Ask us. We are the experts in making sense of all types of data, be that custom primary data that we design and obtain for our engagements, or trying to future proof what lies ahead with new interpretations of big data.