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Tech titan Alibaba has gotten into the ready-to-eat food business via its investment in Freshippo, whose offerings can be seen at this Hema Supermarket in Shanghai. (Photo by CK Tan)
Business Spotlight

China's food businesses seek the recipe to satisfy home diners

Pre-prepared meal kits have been a COVID hit with consumers but pitfalls remain

CISSY ZHOU, Nikkei staff writer | China

HONG KONG -- Six months ago David Chang thought he was on to a surefire moneymaking opportunity: China's booming trade in pre-prepared food. Now, he's lost his appetite for the business.

Chang quit his job and signed up as a franchisee for A-Bite, a company selling frozen dishes such as sweet and sour pork tenderloin, and Kung Pao chicken. He says A-Bite -- founded by Charles Lu, the former chairman of fraud-hit Luckin Coffee, which was once a rival to Starbucks -- told him that for a one-off franchise fee of 30,000 yuan ($4,300), plus an annual management fee of 20,000 yuan, he could get a gross margin of 50% by selling meal kits to consumers who would be bombarded with advertisements paid for by A-Bite.

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