Alibaba’s Taobao Flash Sale, in collaboration with Ele.me, recently unveiled data showcasing a significant milestone: daily orders have surged past 80 million, driven by the expansion of product categories and a robust consumer response to its 50 billion yuan ($6.9 billion USD) consumer voucher program. This initiative not only invigorated spending but also fueled substantial growth for several distinctive restaurant brands.
One such success story is Xiaodiao Lishu Tang, a brand known for its original Beijing cuisine. By strategically refining its product structure, bolstering its online operational prowess, and consistently enhancing customer service on the Taobao Flash Sale platform, Xiaodiao Lishu Tang achieved a noteworthy and stable 18% growth in its takeaway revenue. This performance offers a compelling blueprint for other food and beverage businesses seeking to expand their reach and profitability.
Xiaodiao Lishu Tang officially joined the Taobao Flash Sale platform in May of this year. Within a mere three months, the restaurant experienced a rapid increase in takeaway orders, culminating in an approximate 18% boost in revenue generated through the platform. This achievement highlights the impact of targeted traffic and the brand’s proactive approach to embracing new online channels.
According to Liu Zheng of Xiaodiao Lishu Tang, the brand’s recent performance on the takeaway platform has been exceptional, reporting an overall revenue increase of approximately 20%, accompanied by corresponding growth in order volume and profitability. He noted that the surge in orders was particularly pronounced in June, following its May launch on Flash Sale, with continued stable growth in July. This positive trend is fueled by both attracting new customers and encouraging repeat business, with a notable increase in younger demographics, now accounting for approximately 20% to 30% of the total takeaway orders.
Mr. Liu emphasized that sustained growth hinges on continuous product improvements and enhanced service experiences. For example, capitalizing on the influx of traffic, Xiaodiao Lishu Tang strategically introduced more flexible meal combinations tailored to the growing solo dining market. This strategic adaptation not only catered to a broader range of consumer needs but also increased order volume, enabling Xiaodiao Lishu Tang to effectively leverage platform-driven promotions and enhanced visibility.
Liu Zheng stated, “After launching on the platform, we discovered a significant segment of untapped diners, particularly individuals seeking single-serving meals. This demonstrates that the demand for full-service dining brands exists; however, the challenge lies in establishing effective customer acquisition channels. Taobao Flash Sale has effectively facilitated that vital connection, opening a new avenue for growth.”
Data reveals that within the first week of Taobao Flash Sale’s consumer voucher program, 4,124 restaurant chains surpassed their previous peak sales. Of these, 95% were regional chains, underscoring the program’s effectiveness in stimulating local consumer activity. Moreover, small and medium-sized chains specializing in snacks, regional cuisine, and fast food accounted for over half of the participants.
“The platform largely subsidizes these promotional activities,” Liu Zheng commented, “This model brings about enhanced revenue and increased order volume without burdening merchants with additional costs.” He underscored the significance of this synergistic partnership between the platform and participating businesses, citing it as a critical factor in driving merchants’ vigorous engagement in promotional initiatives.
Wang Chunping, Vice Chairman of the China Cuisine Association Service Committee, acknowledged the subsidy model’s positive impacts for restaurant owners during economic uncertainty, regarding the promotion as similar to a national subsidy program. She encouraged restaurateurs to embrace the digital market and unlock an additional revenue stream within the evolving landscape.
Cao Panpan, Secretary-General of the World Chinese Cuisine Federation’s Community Catering Committee, echoed this sentiment, acknowledging how the convenience and benefits of online consumerism are available to everyone, in turn positively impacting the restaurant industry’s long-term stability and improvement.
Addressing recent market interest around subsidies, Liu Zheng commented: “Businesses operate with existing rules, and, with that in mind, businesses should not engage with subsidies if it negatively impacts business objectives, and instead focus on improving customer service, and adjusting to the new market landscape”. He believes that the Taobao Flash Sale platform’s two-way strategy between merchants is a win-win. “Through platform promotions, our business can receive new customers and activate multiple customer touch-points. More importantly, the brand can stay updated within the consumer trends.”
In response to recent aggressive market strategies such as “zero-dollar purchases” undertaken by some platforms, Xiaodiao Lishu Tang has chosen to refrain from participating in such pricing wars. Liu Zheng posits that although zero-dollar purchases may generate short-term conversions, they do not substantially contribute to enhancing brand recognition. He stated that building a brand is an endurance race, not a sprint. He further adds that more effort should be dedicated to establishing enduring strategic plans, continuously iterate on customer perception, and establish integrated brand strength across product, user experience, and brand communication to promote stable growth.
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