“It’s clear that people have become much more humble now. There’s no more keeping up with the Joneses, and everyone is returning to a more down-to-earth lifestyle.”
This shift has prompted many businesses to launch budget-friendly options known as the “poor man’s meal,” a term that has gained traction online among young adults, as it refers to the cheapest and the most basic menus.
Its current popularity also reflects the bitter reality of youth consumer psychology becoming more sensitive
With McDonald’s offering meals at 13.9 yuan (US$1.9), and chain restaurants Hefu Noodle and Rice Village going as low as 9 yuan and 3 yuan, respectively, brands are continuously lowering prices.
And as more restaurants join the trend, others feel forced to follow, launching their own budget-friendly meals.
Under survival pressure, many once-premium dining establishments have also been forced to lower their prices or introduce affordable options.
“From a business perspective, the ‘poor man’s set meal’ always existed – we used to call it traffic products, which were low-priced items designed to attract customers to come in, some of which were aimed directly at competitors,” said Li Yingtao, a consumer industry consultant at Analysys.
“Back when consumer confidence was high, no one would have labelled such a menu as a ‘poor man’s set meal.’ However, due to increased job pressures and stagnant income growth, the term has taken on a self-deprecating humour.
“Its current popularity also reflects the bitter reality of youth consumer psychology becoming more sensitive.
“This term bears some resemblance to the ‘diaosi economy’ that was popular a decade ago.”
Originating from Chinese internet culture, particularly post-2010s, “diaosi” or loser, originally referred to socially marginalised individuals, often young people, with low income and lack of social recognition, while the term was often used sarcastically.
The so-called diaosi economy refers to a consumption trend driven by the particular groups of society, who typically choose affordable yet functional products to meet their basic needs.
“From the ‘poor man’s set meal’ to the ‘diaosi economy,’ these trends both highlight how young people, dealing with heavy work stress and limited income growth, humorously turn to a resigned self-deprecation amid challenges and uncertainties about the future,” Li added.
As consumer confidence has shown little sign of recovery, retail sales rose by just 2 per cent year on year in June, compared with 3.7 per cent growth seen in May, marking the slowest pace since China lifted its coronavirus restrictions at the end of 2022.
“Our estimates suggest retail sales growth probably contracted outright in seasonally-adjusted month-on-month terms, amid still depressed consumer confidence,” said Zichun Huang, China economist at Capital Economics. “Consumer spending is likely to stay subdued.”
Xu Tianchen, a senior China economist with the Economist Intelligence Unit, said the pursuit for cheaper products partly reflected the ongoing economic pressure that disproportionately hits the youth, and it could have profound consequences, “including an economy that’s more prone to deflation, persistently high saving rate and slower growth”.
“The high-end market could collapse as a result, and premium brands will be forced to redesign their product/market strategy, for example by rolling out cheap entry-level product lines,” he added.
“The tips are offering price competitiveness; catering to personalised demand; and seizing overseas opportunities.”
Consumption upgrades and downgrades tend to coexist with the economic cycle
Navigating through the evolving consumption trends, on-demand delivery giant Meituan said it had penetrated deeper into the industry value chain and explored “innovation business models” to offer more value-for-money selections.
Meituan announced it had expanded its budget-friendly Pin Hao Fan group-buying service, which offers low-priced meals, to more cities.
And in the first quarter, Meituan introduced branded satellite stores – a new model where restaurants exclusively provide “high-quality” and “value-for-money” food delivery services without offering in-store dining.
“Consumption upgrades and downgrades tend to coexist with the economic cycle. In China’s case, it’s in the middle of a downward cycle that started from 2022 and will probably last five to six years,” Xu said.
01:15
China posts 4.7% second-quarter growth, lower than expected
China posts 4.7% second-quarter growth, lower than expected
Consumer staples companies – such as food and beverage makers – are more resilient, as well as producers of tobacco and alcohol, which tends to rise during a downcycle, he added.
During Japan‘s economic bubble in the 1990s, while most restaurants struggled, the expansion of budget-friendly Italian restaurant chain Saizeriya enjoyed great success.
And as economic growth stagnates in China, Saizeriya has also surged in popularity, especially with its affordable “poor man’s set meal,” which has captivated young diners on social media.
The net profit of the Japan-headquartered chain reached a record high of 10 billion yen (US$63.7 million) from September 2023 to the end of May, according to its financial report, representing a year-on-year surge of 182 per cent.
Over 80 per cent of Saizeriya’s operating profit was contributed by its Asia division, which is supported by the Chinese market, as consumers increasingly favour high-value-for-money options.
During Japan’s economic downturn, several brands emerged as success stories by catering to consumer needs for affordability and value, including discount retailers Don Quijote and Daiso, which provided a wide range of products at competitive prices.
Fashion retailer Uniqlo also expanded rapidly with its budget-friendly yet stylish clothes, as it adapted to consumer preferences.
From budget-shopping platform Pinduoduo to e-commerce giants JD.com and Taobao and Douyin, mainstream e-commerce platforms in China are now emphasising “low prices” as a core strategy amid a price war, with the e-commerce unit of Douyin – the Chinese version of TikTok – prioritising “price competitiveness” as its top task for 2024.
Analysts said that the strong performance of the low price sites highlighted the changing consumer sensitivity to prices amid the economic downturn and uncertain outlook.
And as consumers want to find bargains, Pinduoduo and the platforms that followed will only grow faster.
I used to spend whatever I earned, but now I’m afraid to
Barbara Guo, a former project manager who saw her salary fall by half after taking on a law career as a paralegal in Beijing, has started to make her coffee instead of buying Starbucks.
“I’ve been cutting back my expenses for the past few years, and recently it’s been downgraded even more,” she said, adding that price had always been irrelevant when she bought clothes priced under 1,000 yuan.
“Now, I even bring my own lunch, buy sample size cosmetics, and shop for clothes on Taobao.”
The legal industry as a whole is experiencing salary cuts as individuals and companies are reluctant to spend money, which has led to price pressures and intense low-cost competition, she added.
“The economic environment is not doing well, so I feel the need to save money in case of lay-offs and pay cuts,” she said.
“I used to spend whatever I earned, but now I’m afraid to.”