F& B Chair Booklet Purchasing function in Shanghai

job observatoryin the
f&b industry
purchasing function
in shanghai
supported by

This booklet presents the second prospective study conducted by the Food & Beverage Research Chair
of the École Hôtelière de Lausanne (EHL, Switzerland)
The Chair’s first prospective research focused on the purchasing function in 2025 in six European countries : France, the UK,
Germany, Spain, Sweden and Poland. It not only investigated the way the evolution of this function is envisaged by F&B buyers
and restaurant managers themselves, but also confronted it to the opinions of academic experts.
After its completion, we decided to do a similar study for F&B outlets in Shanghai. A new qualitative research allowed us to
adapt the quantitative questionnaire we had done for Europe to the context of F&B purchasing in Shanghai.
Our qualitative research has shown the following elements to be important and typical of the foodservice market in Shanghai :
>> The prevalence of small to very small traditional Chinese restaurants.
>> The strong influence of traditional and persistent networks and ways of functioning on logistics organisation.
>> Guanxi, which refers to the importance attributed to personal relationships, networks and recommendations.
>> The greater need for adaptation and flexibility (price and quantity) in a context characterised by volatile prices and a
growing demand.
>> The issue of food safety, which is a major challenge for F&B operations in Shanghai and in the whole country.
This study allowed us to define the factors which will influence the way the organisation of restaurants, and more specifically
of the purchasing process and function, evolve until 2025. They belong to four domains :
>> The structure of the market : The Chinese market is highly fragmented, with a majority of small, traditional operations.
It is evolving towards an increased professionalisation, as the development of restaurant chains contributes to its
concentration. However, the strength and speed of this evolution are di÷cult to anticipate.
>> Food safety : Food safety scandals occur regularly in China. Even though consumers in Shanghai tend to be resigned
about the safety of food products, addressing this issue will undoubtedly be amajor challenge for restaurant operations.
Food storage, transportation and traceability will therefore be priorities.
>> Technology : The gap between traditional and occidental restaurant operations is all the more visible that the use of
IT and technologies di≈ers radically between the two. There is also a di≈erence in productivity between these two types
of outlets : it is lower amongst traditional operators. This shows that there is an important progress margin in the use
of management software and technologies, both for restaurant kitchen operations and to communicate information
to suppliers or customers.
>> Political interventions : The Chinese government has the power to modify situations with unexpected intensity
and strength, especially when there are issues which threaten the social stability of the country. If the government,
in collaboration with Shanghai authorities, decided to implement strict controls and dissuasive sanctions for food
operators, the F&B market could change rapidly and radically : a large part of traditional outlets would be forced to
either adapt or close down.
Along with the results we obtained, the changes anticipated by the experts and professionals we interviewed allowed us to
identify the skills and activities which the purchasing function will require in 2025 in Shanghai.

Contents
Introduction.................................................................................................1
Context....................................................................................................... 2
Results....................................................................................................... 5
Consequences on restaurants...................................................................12
Most probable scenarios for purchasing in restaurants in 2025...............13
Consequences of the most probable
scenarios on the purchasing function.......................................................16
Conclusion.................................................................................................17
Acknowledgements.................................................................................. 20

1Job observatory in the f&b industry purchasing function in shanghai
Introduction
The Food & Beverage Industry Research Chair was founded in 2010 by EHL and is supported by Danone Professional, Nestlé
Professional and Unilever Food Solutions.
Its objectives are :
>> To contribute to the development of innovative trends for operators, suppliers, distribution channels, sellers and
marketers.
>> To enhance students’ and professors’ understanding of the industry.
It has two work axes :
>> Observation post for current and prospective jobs in food & beverage outlets.
>> Business intelligence (monitoring of strong and weak signals of F&B professionals’ interest in sustainable development).

Context
The Chair has created an observation post for current and prospective jobs in the catering industry, which aims to :
>> Develop a better understanding of F&B jobs : operators, suppliers, distribution channels, sellers, marketers, etc.
>> Provide a framework for job identification and employment trends that includes di≈erent methodologies and agree
on a common working language.
>> Analyse the impact of technological or organisational advances on the skills required for F&B jobs.
This booklet summarises the second project conducted by the Chair : a prospective study on the purchasing function in F&B
outlets. The goal was to anticipate how this function will have evolved by 2025, especially in terms of activities and skills. This
of course implied anticipating the evolution of the macro-environment as well.
After a first research conducted in several European countries, we chose to focus on Shanghai. We therefore studied the
macro-environment in China, and then more specifically in Shanghai. For both, the main economic, legal and social issues were
studied. We also interviewed F&B experts and professionals who worked in Shanghai. This allowed us to identify specificities
and di≈erences with Europe which needed to be taken into account, and thus to adapt our questionnaire before distributing
it on a large scale to restaurants in Shanghai.

China & shanghai macro-environment
Main features of the macro-environment in China :
>> Most populated country in the world (1.35 billion people).
>> Largest country in Asia.
>> Going through major economic, social and ecological changes.
>> Responsible for 40 % of the worldwide growth.
>> Industry constitutes between 45 and 50 % of the GDP.
>> Food safety is a national priority after a 2008 scandal.
>> Food safety scandals are covered almost weekly in Chinese newspapers.
>> Human cost of pollution in China : 750,000 premature deaths every year.
Main features of the macro-environment in Shanghai :
>> Strategic place in terms of economic output, logistic facilities and localisation.
>> Most populated city in China (5.2 million permanent residents in 1949, 14.4 million today).
>> Population is mainly old and the city attracts large numbers of former farmers.
>> In 2009, the annual GDP per capita was USD 11,750 (highest in the country).
>> Remains the first destination for foreign investments in China.
>> Aims to become the Chinese leader in food safety. Several measures were taken to this end : financial rewards
for denunciations, a stricter application of laws and long jail sentences for those responsible for unsafe food
productions.
>> Food supply chains in their entirety need to be more involved in the improvement of sanitary conditions.
Main features of the Chinese food and beverage industry :
>> One of China’s fastest growing sectors : its output increases by more than 20% each year.
>> In 2009 Shanghai was the city with the highest consumer foodservice sales, followed by Guangzhou.
>> The Chinese foodservice market way estimated at US $ 333 billion in 2012, among which US $ 306 billion were
accounted for by independent firms.
>> Global chains are expanding rapidly (15 % growth in volume from 2009 to 2010).
>> Chinese menus have been changing following a rise in disposable incomes and a change in dietary habits.
>> In big Chinese cities, people are prepared to pay three times more for organic milk.
>> Food stalls are a common type of outlet in Shanghai.
>> Only 30 % of the 10,000 existing food stalls have reliable suppliers. Moreover, less than 10 % of the 650 stalls
investigated had a business license.
>> In restaurants the whole family is involved.
The purchasing function
Ensuring the liaison between internal departments and suppliers, the purchasing function is located upstream of the production
and transformation process. Overall, it can be considered strategic, as it contributes directly to the quality policy of a company.
It is essential that the buyer have a global vision of strategy and business objectives and be able to meet the specific needs of
di≈erent departments that depend directly or indirectly on its performance. These departments can include sale, marketing,
development, production and logistics. To do so, the buyer must above all use business intelligence so as to identify trends
and suppliers. The purchasing function exists in all institutions, but its explicit position might not. It is therefore frequent for
independent restaurants to handle or outsource procurement. In larger companies, one or several persons are specialised in
purchasing.
The buyer must take responsibility for all procurement management tasks, such as order tracking, inventory and budgets. In
an e≈ort to control costs, he looks for suppliers and selects products according to defined sale or production criteria (quality,
cost, delivery time…). Familiar with the characteristics of suppliers and their products, he negotiates the terms of purchase
and delivery in collaboration with logistics services. But, above all, he must study the markets, get in touch with potential
suppliers and stay aware of the latest innovations. To do this, he practices a “purchase watch” by analysing purchase and
supply market trends. This leads him to collect a potentially considerable quantity of information that he is able to sort and
prioritise so as to optimise its use.

For most people, the buyer and the seller appear to have common skills. Purchasing of course has an extremely strong com-
mercial dimension. It is sometimes associated with marketing because it requires a thorough knowledge of the markets. Some
large companies have merged their purchasing and marketing departments in order to have procurement and distribution
monitored by the same persons.
Creation of prospective scenarios
We identified three sub-systems (macro-environment, foodservice market and purchasing organisation), each with a dif-
ferent number of variables. We considered each variable’s past evolution, its trend and the disruptions which could a≈ect
it. We also identified three or four degrees of intensity or performance for each variable. We then crossed the variables and
their intensity levels. This produced fourteen micro-scenarios for the macro-environment sub-system and fifteen for the
foodservice market and purchasing organisation sub-systems. Finally, a cross-analysis determining which micro-scenarios
were most compatible with each other allowed us to create a total of nine scenarios.Interviews of chinese professionals
& adaptation of the european survey
For the quantitative research, we adapted the survey we had created for our European study. We therefore had to identify the main
di≈erences between the two areas.To do so, in addition to studying the macro-environment, we interviewed several experts on the
catering industry in China and Shanghai. Several key aspects of restaurant purchases were discussed with them : the organisation
of purchases, the relations between restaurateurs and suppliers, the importance of technologies and CSR issues.
Following these interviews, the variables which concerned Europe rather than China were removed, and we added ques-
tions taking into account the following elements :
>> The prevalence of small to very small traditional Chinese restaurants.
>> The strong influence of traditional and persistent networks and ways of functioning on logistics organisation.
>> The importance attributed to personal relationships, networks and recommendations (guanxi).
>> The greater need for adaptation and flexibility (price and quantity) in a context characterised by volatile prices and a
growing demand.
>> The issue of food safety, which is a major challenge for F&B operations in Shanghai and in the whole country.
The survey was then checked by a panel of foodservice industry experts.
Data collection
To know which changes restaurant managers and buyers anticipate for 2025, we hired English-speaking Shanghai students to
distribute the questionnaire to people in charge of purchasing in catering outlets.
We thus gathered a total of 304 questionnaires, among which 294 were usable.

Results
Description of the sample
NUMBER
OF SEATS
1 to 50
83%
51 to 100
12%
101 to 200
3%
more than 200
2%
83 % of small restaurants
The overwhelming majority of our respondents (83 %) work
in a restaurant that have between 1 and 50 seats. Only 5 % of
them work in an outlet with more than 101 seats.
2 to 100
62%101 to 150
9%
151 to 200
17%
more than 200
12%
AVERAGE
NUMBER
OF MEALS
62 % with less than
100 meals/day
62 % of the restaurants included in our sample serve on
average 100 meals per day or less. The second most common
answer was 151 to 200 meals per day.
more than 30
3%
21 to 30
7%
11 to 20
16%
6 to 10
29%
1 to 5
45%NUMBER OF
EMPLOYEES
45 % of very small
enterprises (VSEs)
Almost half our respondents (45 %) work in restaurants that
have 1 to 5 employees. In 29 % of cases, the outlets have
between 6 and 10 employees, while 16 % have 11 to 20. Only
3 % have more than 30 persons in the staff.

TYPE OF
RESTAURANTS
Traditionnal
44%
Fine dining
12%
Fast casual
7%
Fast food
27%
Bar/pub
1%
Street stall
4% Tea room
2%
Other
3%
Independent
89%
Chain
11%
INDEPENDENT
VS CHAIN
89 % independent restaurants
Our sample is composed of 89 % of independents and 11 % of
chains. This distribution is fairly similar to the one we had in
our European study (84% independents, 16 % chains).
44 % traditional restaurants
Traditional restaurants – mostly old, small structures with few
processes and very traditional practices – make up 44 % of our
sample, while 27 % of our respondents work in a fast food out-
let. The third most common kind of outlet in our sample is fine
dining (12 %). The sample also includes fast casual restaurants
(7 %), street stalls (4 %), tea rooms (2 %) and bars/pubs (1 %).
By contrast, in our European study on the purchasing function,
62 % of the respondents were traditional restaurants, 14 %
described themselves as fine dining and 7 % as fast casual,
and only 2 % were fast food outlets.
one
49%
two
28%
three
11%
four
2%
five
9% seven
1%
NUMBER OF
PEOPLE IN THE
PURCHSING
DPT
44 % with a purchasing
department
44 % of our respondents work in an outlet that has a purcha-
sing department. 49 % of these are single-person departments,
whereas 28 % are run by two staff members and 11 % by three.

MACRO-ENVIRONMENT & FOODSERVICE
Legislation
on food safety
implemented
No practice gap
between Western
and Chinese restaurant
Some products
replaced
by substitutes
Di÷cult for
suppliers to meet
rising demand
0%
20%
40%
60%
LAW PERTAINING TO THE CATERING INDUSTRY
Laws more
restrictive
Laws allow improvement
of practices
Food safety controls
more systematic
Food storage
regulated
Food transportation
regulated
0%
20%
40%
60%
Yes
No
Undeﬁned
Prospective results (2025)
The previous graphs show the percentage of positive responses for each variable by country. A positive response generally means
that the respondent agreed with an assertion, though in some cases it corresponds to the selection of one option over others.
We compared these results with those of our previous research. This allowed us to get an idea of how the opinions and expec-
tations of restaurateurs in Shanghai di≈er from those of restaurateurs from various European countries.
As a reminder, the questions concerned what the restaurant managers and buyers thought they would do or need in 2025, as well
as how they thought the F&B market and the macro-environment would be. They therefore indicate their opinions on the future.
F&B market & environment in 2025
The respondents globally disagree with the idea that the practice gap between Chinese and Western restaurant will disappear
(65 %) and that some products will be replaced by substitutes (61 %). They are uncertain (62 %) about whether the legislation
on food safety will be implemented. For the assertion “suppliers will have di÷culties meeting the rising demand”, there are
two dominant responses rather than one : 43 % of the respondents respond neutrally and 40 % negatively. By contrast, only
17 % agree.
Shanghai restaurateurs have the same opinion as their Spanish and Swedish colleagues regarding food substitutes in
2025. By contrast, in France, the UK, Spain and Poland, respondents reacted rather positively to this variable.
Neutrality is strikingly high (68 %) in response to the assertion that laws will be more restrictive. On the other hand, the pos-
sibility of laws giving restaurateurs the opportunity to improve their practices is rejected by 53 % of the respondents. 43 % of
them also disagree with the assertion that food safety controls will be more systematic, and the same percentage is neutral
about food storage regulation. For the last variable, the regulation of food transportation, no response stands out : 31 % of the
participants in our study think that transportation will indeed be regulated, 35 % disagree with this idea, while 34 % are neutral.
The way legislation will evolve is much less clear for Shanghai restaurateurs than for their European counterparts.
This can be explained notably by the di≈erence in political regime. However, it is notable that, as those in Europe,
restaurant managers in Shanghai do not think that laws would allow the improvement of practices.

CSR BEHAVIOUR
Food safety improved
thanks to simplified
legislation
CSR practices through
nutrition
CSR practices through
eco-labels
Monitor
waste of food
Monitor waste of
water and energy
0%
20%
40%
60%
PURCHASING & STRATEGIES: IMPROVING THE PURCHASING PROCESS WILL INCLUDE
Partnership with other restaurants
Implementation of documented procedures
Improve cost forecasting
Improve the e÷ciency of the process
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Yes
No
Undefined
For the first three variables, the di≈erence between the respondents’ reactions is not strongly marked. Disagreement prevails
for the assertions “food safety will be improved thanks to a simplified legislation elaborated in collaboration between autho-
rities and practitioners” and “you will implement CSR practices in your restaurant through eco-labels” (37 % in both cases).
The idea of implementing CSR practices through nutrition is approved by a small majority (36 %) of the respondents. For the
other two variables, the contrast is more striking : the perspective of monitoring the waste of food and of water and energy
seems unlikely to respectively 47 % and 49 % of the restaurateurs.
According to various studies, sustainable development will be of great importance in Shanghai in the upcoming years ;
the Shanghai survey therefore had more questions on this subject than the European questionnaire. The Shanghai
respondents are more divided on the topics of the implementation of nutrition and eco-labels in menus than the Euro-
pean professionals we contacted for our first study. Their overall response to each of these two variables is close to
the Polish restaurateurs’ : accepting, but not overwhelmingly so. However, unlike their Polish colleagues, they think
that CSR is slightly more likely to be implemented through nutrition than through eco-labels.
The purchasing function in 2025
When it comes to the ways in which Shanghai restaurateurs think they will improve the purchasing process, improving its
e÷ciency is the first or second selected variable in 78 % of the cases. The improvement of cost forecasting is mentioned as
first or second option by 65 % of the respondents. For the options “implement formal and documented procedures” and “enter
into partnerships with other restaurants”, this is the case 46 % and 9 % of the time, respectively.
In Shanghai, the respondents are less confident than the European ones when it comes to the improvement of cost
forecasting during the coming years. They also attach more importance to the improvement of the e÷ciency of the
purchasing process.

PURCHASING & IT: IT WILL BE USED TO…
Monitor orders
Assess the e÷ciency of purchasing (cost)
Implement procedures for purchases
Order the purchases
Network between cash register & purchasing department
Monitor safety of goods
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
PRIORITIES IN SUPPLIER SELECTION WILL BE…
Safety of goods
Degree of trust
Personalisation of the o≈er
Habits
Adaptation of deliveries
Flexibility in payments
Quality of products
Respect of F&B costs
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
The monitoring of orders, the assessment of the e÷ciency of the purchases and the implementation of purchasing procedures
are the three most commonly cited uses of IT for 2025. These variables appear in the respondents’ top three choices in 89 %,
74 % and 67 % of the responses, respectively.
During the research on the macro-environment in Shanghai, it became apparent that food safety management was and would
remain crucial. This variable was hence emphasised compared to the survey which was created for our European study on the
purchasing function. The respondents’ answers suggest that food safety will not be managed using technology.
Shanghai respondents think that IT will be used not only to assess the e÷ciency of purchasing (which was also consi-
dered important by the European respondents), but also to monitor orders and to implement purchasing procedures.
In our European study, the former variable garnered a very small amount of positive responses, while the latter was
overall only mildly accepted ; the options those restaurateurs primarily chose were “assess the e÷ciency of the pur-
chasing process” and “order the purchases”.
The respondents anticipate their priorities in supplier selection in 2025 to be the respect of F&B costs (83 % of occurrences in
the four main decisive factors), the quality of products (80 %) and the adaptation of deliveries (63 %).
The two most important variables were the same in Europe, but not the third one : the European respondents listed
trust after respect of F&B costs and quality. Adaptation of deliveries reached the third place in Sweden, though. The
importance of this variable is probably linked to the size of the Chinese city and to the flexibility this requires from
restaurants. Finally, flexibility in payments and personalisation of the o≈er is more important for the Chinese sample
that for the European respondents, who deemed these two variables insignificant.

PURCHASES & RELATIONSHIP WITH SUPPLIERS
Informal
& based on trust
Based
on contract
In a virtual
market
0%
20%
40%
60%
Yes
No
Undeﬁned
PURCHASER WILL EXPECT FROM SUPPLIERS
Clear nutritional
information
CSR practices The use of new techno-
logies for traceability
Participation in
stock management
0%
20%
40%
60%
MANAGERS’ ATTITUDE TOWARDS SUPPLIERS
Be proactive in
supplier selection
Use wholesalers
more frequently
Use group purchasing
more frequently
Buy more from
independent suppliers
0%
20%
40%
60%
The assertion that relationships with suppliers will be informal and based on trust elicited a mostly neutral response (51 %) ;
the agreement rate for this variable is low (15 %). The response to relationships being based on contracts is slightly positive :
38 % of the respondents agree, while 30 % of them disagree and 32 % are neutral. In the case of the third variable, the existence
of a virtual market, the disagreement and neutrality rates are almost the same (37 % and 36 %, respectively). The diversity of
restaurants in our sample explains this response.
In this case too, restaurateurs ﬁnd trust less important in Shanghai than in Europe. On the other hand, a development
of contract-based relationships is expected both in Europe and in China. Shanghai restaurateurs are less resistant to
a virtual market than their European counterparts.
All four variables of this category have a very similar response structure : in each case, agreement is the most prominent reac-
tion (46 % to 51 %), disagreement is low (19 % to 22 %) and about one third of the respondents are neutral (19 % to 22 %). The
variable for which the results are most contrasted is “clear nutritional information”.
In Europe too, restaurateurs thought that CSR-related services and o≈ers, especially nutritional information, CSR
practices and technology-enabled traceability, would be managed by F&B suppliers. The idea of participating in stock
management was less positively received than in Shanghai, where restaurateurs are more oriented towards technology,
the implementation of procedures and the improvement of the e÷ciency of the function.
More than half of the restaurateurs which took our survey (54 %) are undecided on whether they will be proactive in supplier
selection. Results are less clear-cut for the other variables. For the use of wholesalers, the agreement and neutrality rates are
very close (35 % and 38 % respectively). More frequent group purchasing and purchasing from independent suppliers prompted
almost the same reactions : respectively 29 % and 26 % of approval, 32 % and 33 % of rejection, 38 % and 41 % of indecision.
It is more di÷cult for this sample to anticipate the future of supplier selection than it was for our European respondents.
Moreover, their response to the variable “use wholesalers more frequently” is the opposite of the European restaura-
teurs’ response ; they might therefore anticipate a restructuration and a consolidation of the supplier market.

EVOLUTION OF THE MARKET
Productivity will increase
and staff be reduced
Market will be
directed by suppliers
Suppliers in
cooperatives
0%
20%
40%
60%
USE OF TECHNOLOGIES
Traditional will use
technology as much
as western
No more correlation
between size of
restaurant & use of tech
Technology integral
part of the relationship
with suppliers
Technology integral
part of purchasing
process
0%
20%
40%
60%
Yes
No
Undeﬁned
39 % of the respondents think that neither will productivity increase, nor will sta≈ be reduced. 37 % of them are unsure whether
suppliers will direct the market, but 36 % think that it will not be the case. On the other hand, uncertainty clearly dominates
the responses to the assertion “local suppliers will be organised in cooperatives”.
The idea of traditional Chinese restaurants using technologies as much as Western restaurants does not elicit agreement : it is
rejected by 40 % of the respondents, while 42 % are not sure what to think about it. According to 46 % of the replies we collec-
ted, there will still be a correlation between the size of restaurants and their use of technology in 2025. Respondents also think
that technology will be an integral part neither of the relationship with suppliers (41 %), nor of the purchasing process (42 %).
Most of the respondents (41 %) are uncertain about the necessity of training in nutrition. Reactions are almost perfectly evenly
distributed for training in technologies : 34 % agree that it will be essential, 34 % disagree, and 32 % are neutral on the ques-
tion. Finally, 41 % of the respondents do not deem training in management necessary. Management and nutrition are thus the
domains in which they think training will be least useful. This perception might be due to the fact that they think they already
have the required skills ; alternatively, perhaps they are not qualiﬁed, and thus have a narrower vision of the job and do not
see how training could be useful.
This disinterest in training is similar to the opinion of restaurateurs in Poland and, to a lesser extent, Germany.
Respondents’ comments
At the end of the survey, we asked the following question : “What do you wish you had today from your food and beverage
suppliers ?” A large part of the restaurant purchasers or owners who participated in our study replied to this question.
Their comments express three types of needs :
>> A need for cheaper products, which illustrates
theirpricesensitivity ;theterms“price”,“cheaper”
and “reasonable prices” exemplify this need.
>> A need for healthier products, formulated in
clearandmeaningfulterms :“healthy”wasoften
quoted, and terms such as “safe”, “safety” and
“clean” appeared too.
>> Aneedfora closerrelationshipwithsuppliers :
wordslike“integrity”,“trust”and“partnership”
show that this kind of strong relationship is
rather rare. Some respondents even asked for
“more supply chain supervision”.
The tag cloud of the comments looks like this :

Consequences
on restaurants
The SPSS clusters revealed two types of 2025 restaurants :
“getting better” outlets and “old school” outlets.
“Getting better” outlets
This cluster is representative of the perception of chained or innovative F&B outlets. It attests a positive anticipation of the use
of IT and technologies in restaurants. It also suggests potential improvements in processes and training.
>> Legislation : evolution of the legislation to ensure food safety, secure supply chains and storage ;
>> Strategy : contracts with suppliers, ﬁnancial management ;
>> Nutrition and CSR : sustainable, safe and nutritional products will be preferred, waste and energy will be monitored ;
>> Technology : monitoring of traceability and of the purchasing process, automatisation of the service and the kitchen,
automatised ordering for customers ;
>> Training : training in management, nutrition and IT will be mandatory.
“Old school” outlets
This cluster is representative of the perception of traditional Chinese restaurants and shows that traditional management
practices will endure. E≈orts to improve nutrition and food safety controls are nevertheless expected.
>> Legislation : more food safety and storage controls, but still not enough.
>> Suppliers : will have di÷culties meeting the demand, relationships with buyers are informal and based on habits,
contracts are starting to be used ;
>> Purchases : just-in-time stock management, the value for money of products and the suppliers’ flexibility for
payments are preponderant criteria ;
>> Nutrition and CSR : nutrition is becoming important, no monitoring of waste or energy ;
>> Technology : might be used, but only for traceability.
Getting better
23%
Old school
77%
TYPE OF
RESTAURANTS

Most probable scenarios
for purchasing in
restaurants in 2025
We looked for correlations in the results of the quantitative study to determine which of our scenarios are the most probable.
Out of the nine scenarios we had constructed, two emerged.
A basic and traditional purchaser
82% of correlations confirmed
In this scenario, there has been a “soft landing” of the Chinese economy. This slow GDP growth delays the evolution of many
markets and industries, including the F&B market. The remaining pressures (urbanisation, ageing of the population and
inﬂation of food prices) favour an increase in the e÷ciency of the market. Indeed, they should lead to a rationalisation of the
F&B market and to productivity gains.
F&B Market
>> Independent and traditional restaurants remain the core of the foodservice market in Shanghai.
>> The number of F&B customers has increased.
>> The budget for F&B expenditures and the average ticket are still low, as price is a crucial variable for customers.
>> Persistent food safety scandals, but no concrete action is undertaken to improve the situation.
>> More restrictions and controls of food storage and safety.
>> Consumers are resigned.
>> The dichotomy of the market is especially strong : modern outlets use IT tools, while traditional ones do not.
>> Restaurants compensate low sta≈ productivity by having numerous badly paid employees.

Purchases
>> The use of IT and technologies for purchases, production and delivery is limited.
>> The purchaser ensures food procurement and adapts food quantities to customer demand and budgets.
>> The restaurant purchaser does not need to be a strategic thinker.
>> Low degree of definition of the need or of anticipation of the demand.
>> Negotiation and reactivity are constantly needed.
>> The purchaser’s activities and relationship with suppliers remain simple, based on routines and mainly informal.
>> The purchaser does not have defined processes for his purchases.
A strategic purchasing manager
68% of correlations confirmed
This scenario would be particularly appropriate in case of an outstanding GDP growth in China and of an improvement of
infrastructures. This would drive strategic governmental choices, translated in public investments for productivity and a more
qualitative growth. To compensate for an important inflation and evolution of food prices, the foodservice industry would be
obligated to incorporate more qualifications, knowledge and technical skills.
F&B Market
>> Concentration of the market due to the extension of restaurant chains and the disappearance of many small,
independent operations.
>> Improvement of the overall market.
>> Implementation of e÷cient and secure supply chains.
>> The gap between chained and independent restaurants still exists, but is less important.
>> Processes and IT tools are used to better monitor the operations and increase productivity.
>> The use of IT and technological devices is not yet generalised to the whole foodservice.
>> Robotisation, automatised ordering for customers in chained and high-end restaurants.
>> IT contributes to a general pursuit of greater productivity and a diminution of the costs.
>> Expectations regarding safe, sustainable and nutritional products are high.
>> The evolution of the legislation encourages adaptation.
Purchases
>> Purchasers gain expertise in legislation, safety, sustainability and nutrition.
>> Progress in food transportation, storage and traceability thanks to technological solutions.
>> More strategic and professional behaviour.
>> Purchasers implement processes and take initiatives to improve collaborations with suppliers.
>> Network management is an obligation for the purchaser.
>> Technology has improved the ordering of purchases and the monitoring of the suppliers’ market.
>> Financial management of the purchases is a priority for the purchaser.

Additional scenario : state regulation
Contrary to the two scenarios described above, this one is not the result of the survey analysis. It has been elaborated on the
basis of a remark which was made by every expert we met in Shanghai and Beijing : the Chinese government has the power to
modify situations with unexpected intensity and strength (compared to Western countries), especially when there are issues
which threaten the social stability of the country.
F&B Market
>> Complete control of food safety and traceability by governmental agencies.
>> Major strategic choices and public investments in the foodservice market to secure supply chains.
>> Most small and traditional businesses are not able to comply with the new regulations or to invest to regularise
their situation.
>> Consumers are more inclined to “hop” between restaurants, as more of them seem safe and secured.
>> Restaurants specialise in health issues related to food consumption.
>> Probable increase in the use of IT and technologies improving food security.
Purchases
>> The purchaser occupies an even more central and strategic position in the restaurant, as priorities and finances
would be deeply influenced by purchasing requirements.
>> Very high degree of professionalisation of the purchaser or purchasing department.
>> Purchasers are versatile technicians : able to understand, apply and anticipate legal norms and evolutions and at
the same time to find and use the most adapted means to do so.
>> IT tools mobilised to reach the highest food safety standards possible.
>> The purchaser has to be proactive, both in the restaurant and with external partners.
>> Concentration of the supplier market.
>> Development of new products with wholesalers and group purchasing organisations.
>> Within these strategic supply chains, sanitary, nutritional and even ecological aspects are strongly improved.

Consequences of the most
probable scenarios on the
purchasing function
Several kinds of activities and skills will have appeared or become more important in 2025, depending on the evolution of
the market.
A basic and traditional purchaser A strategic purchasing manager State regulation
Activities >> Beginning of professionalisation
>> Specialised in purchasing
>> Multitasks
>> Technician
>> Application of the law
>> Chooses suppliers based on
partially formalised selection
>> Endured sustainability
>> Moderate communication
>> Moderate professionalisation
>> Specialised in purchasing
>> Multitasks
>> Negotiator
>> Application of the law
>> Chooses suppliers based on
partially formalised selection
>> Limited number of suppliers
>> Strong communication
with suppliers
>> Endured sustainability
>> Scans the environment
>> Food safety controls
>> Regulation of storage and
transportation for food safety
>> Complete professionalisation
of the activity
>> Adapts quickly to the needs
>> Negotiator
>> Pools for purchasing
>> Sustainable practices
>> Implements and anticipates
legal aspects
>> Monitors waste (food,
energy, water)
>> Regulates food storage
>> Uses technological tools to
communicate with suppliers
>> Tracks traceability
>> Chooses key suppliers based
on formalised selection
>> Contract management
with suppliers
>> Scans the environment
Skills >> Multitasking
>> Ability to understand laws
>> Ability to recognise safe
and healthy products
>> Ability to analyse
suppliers’ practices
>> Cost-focused
>> Basic communication skills
>> Basic technological skills
>> Multitasking
>> Ability to recognise safe
and healthy products
>> Ability to analyse
suppliers’ practices
>> Ability to select a small
number of suppliers
>> Cost-focused
>> Communication skills
>> Structuring relationships
with suppliers
>> Basic technological skills
>> Ability to understand
& apply laws e÷ciently
>> Ability to monitor food safety
>> Ability to scan the environment
>> Ability to monitor and
formalise activity
>> Ability to scan & understand
the environment
>> Ability to understand
internal needs
>> Ability to anticipate the
legal evolution
>> Understanding of
sustainability issues
>> Ability to regulate food storage
>> Cost-focused
>> Ability to monitor traceability
>> Communication proﬁciency
>> Ability to use advanced
technological tools

Conclusion
The results of our study stress the high level of changes that will occur in the Chinese F&B market, especially the Shanghai
area, by 2025.
The evolution of the foodservice market will depend on several factors : the degree of concentration and di≈usion of techno-
logies and the frequency of food safety crises, for example. Moreover, several evolutions of the F&B market in Shanghai will
depend on local and national policies such as food safety regulation. Indeed, if some strict rules are adopted and e÷ciently
implemented, a large part of the F&B outlets would have to adapt or close down.
Even if an economic landing of the Chinese economy is expected, the Chinese middle class will continue to progress and to
request better and safer products. This will prompt an increase in the market value and an improvement of F&B practices. To
answer this demand, restaurants will have to improve their processes and use tools.
There already is an improvement trend in restaurant management, instigated by restaurant chains and some especially modern
restaurants in Shanghai. Nevertheless, the dichotomy of the market will remain strong. Indeed, two categories of restaurants
emerged from the quantitative part of the study.
On the one hand, there will be small, traditional operators. They will remain a significant part of the restaurant operation in
Shanghai, though they will form a smaller majority in the future. They use few processes and technologies but provide cheap
and convenient food. They will be able to do this notably thanks to a low-paid workforce. These operations will marginally
improve their attitude towards food safety and nutrition, but their priority will be to remain as flexible as possible in order to
adapt to the changes in food prices, product availability and customer requests.
On the other hand, modern and innovative restaurants (the majority of which are chains) will increase their market share.
Sta≈ productivity and financial profits will contribute to their success and development in the Shanghai F&B market. They will
continuously implement management processes and training for their employees in order to gain e÷ciency. Software, IT and
even robotisation of some specific tasks will also be used to that end. Moreover, these outlets will be better able to answer
the growing customer demand for safe, nutritional and sustainable meals.

Based on this research, here are our recommendations for F&B suppliers :
Training
>> Make restaurant managers understand the need for training
>> Help restaurants have healthier meals by providing training
>> Provide basic computer training (free or cheap)
Technology
>> Provide simple technological (Excel) and paper tools to help restaurants monitor their costs
>> Support stock management in restaurants (IT tools, connection with cashier machines or suppliers…)
>> Monitor and support changes towards an increased use of technology in the kitchen (production), for service and for
purchases (for chains)
>> Provide simple traceability tools
>> Packaging that protects products in any storage conditions
Products
>> O≈er safe products & highlight their safety
>> Emphasise the good value for money of your products
>> Provide cheap products
>> Provide healthy products
>> Provide packaging that protects products in any storage conditions
Relationships
>> Improve trust in your brand
>> Favour long-term relationships based contractual agreements
>> Support them in the improvement of their practices
>> Be ﬂexible in payment deadline
Sustainability & nutrition
>> Communicate and highlight the safety of your practices
>> Communicate more information on the healthy aspects of your products

Acknowledgements
This report would not have been possible without the contributions of several academic
colleagues and institutions members :
>> Mr Dominique Jolly, Professor at Skema Business School, Shanghai campus
>> Mrs Juan Shan, Assistant Professor at School of Management, Shanghai
University
>> Mr Pascal Marmier, Executive Director / Vice Consul General, Swissnex China
>> Mrs Viviane Gut, Communications & Entrepreneurship, Swissnex China
>> Mrs Stephanie Chatelanat Marmier, Advisor Food and Hospitality Services,
Shanghai
Numerous F&B professionals in Shanghai also participated in the qualitative research or
in the collect of data :
>> Mr Franck Lafourcade, Area General Manager - Eastern China General Manager -
Soﬁtel Shanghai Hylandand
>> Mr Peter Weber, RVP & GM at Four Seasons Hotel, Shanghai
>> Mr Jayan Shrestha, Food and Beverage Manager, Soﬁtel Shanghai Hyland
>> Mr Thomas De Bruyne, Mr Max Bonon, Mr Benjamin Blaise, co-founders and
managing partners at “le Café des stagiaires”, Shanghai
>> Mr Alexandre Mathais, Assistant Director of Food and Beverage Four Seasons
Hotel, Beijing
Finally, students from EHL and from the School of Management of Shanghai University
helped us translate documents to and from Mandarin, improve of our data and network in
the Shanghai F&B market and collect data for the quantitative research :
>> Mrs Hui Hui Yang, BSC 3 Student, EHL
>> Mrs Ludivine Roux, BSC 3 student, EHL
>> Mrs Xirong Lu, AP student, EHL
>> Mr Tom Moers, BSC1 student, EHL
>> Mr Shan Zhou, Student of School of Management, Shanghai University – who did
a particularly amazing work during the collection of the data.

Research team
Food & Beverage Industry Chair - École hôtelière de Lausanne
dr. christine Demen Meier
Chair holder, PhD
+41 21 785 14 92
christine.demen-meier@ehl.ch
Clémence Cornuz
Scientiﬁc collaborator
+41 21 785 13 57
clemence.cornuz@ehl.ch
Stéphanie Bonsch
Scientiﬁc collaborator
+41 21 785 13 57
stephanie.bonsch@ehl.ch
Nicolas Siorak
Researcher
+41 21 785 13 07
nicolas.siorak@ehl.ch

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