


































5 Tackling the Insufficient Food Supply in the Sufficient Chinese Hot-Pot Chain Restaurant Industry - A Summer Project


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Tackling the Insufficient Food Supply in the Sufficient Chinese Hot-
Pot Chain Restaurant Industry - A Summer Project 

Mohan Huo, Jie Peng, Ke Wu, Linxuan Zhang, and Yiao Liu 

Xi’an Jiaotong-Liverpool University, Suzhou, China 

Abstract 

Purchasing is widely acknowledged as a critical factor for business survival and 
success. This study uncovers the traditional purchasing model that affects the cost of 
vegetables and eventually food quality, based on our summer field research on 
Chinese hot pot restaurants. Seventeen retail branches were studied, and we propose 
an innovative procurement model to reduce the total cost of purchasing vegetables. In 
the new procurement model, vegetables shall be transported from the vegetable base 
to the central processing plant for cost-down measures by centralized processing and 
cleaning. Compared to the traditional method, the innovative purchasing approach 
integrates upstream supplying resources and standardizes vegetable processing, 
contributing to cost reduction in vegetables and processing. In the research, the group 
collected data about food sales, prices from suppliers, and related processing to 
calculate aggregate procurement costs containing vegetables, delivery, and 
processing costs. The calculation indicates that the new method produces an 
additional 21,102 Chinese RMB in vegetable and delivery costs. However, it removes 
the need for a vegetable cleaner in each outlet, which could save more than 70,000 
Chinese RMB. Therefore, we verified such an assumption with qualitative interviews 
with the managers of hot-pot chain restaurants and found that the actual saving can 
be around 53,356 Chinese RMB. In addition, the standardization and quality control of 
dishes and fuller utilization of staff have been overlooked in prior daily operation 
management. Finally, the proposed new procurement model can also be applied to 
global hot pot restaurants.  

Key words: purchasing, procurement model,  saving 

Introduction 

The food industry is fragmented, highly regulated, and increasingly complex due to 
globalization (Pullman and Wu, 2021). In particular, because of the rise of E-
commerce, the correlation between market activities and geographic environment 
moderates, and food control, including cost and quality management, becomes 
arduous compared with past times. Aktas and Bourlakis (2020) asserted that food 
supply chains are crucial to satisfying community needs and underpin environmental 
sustainability. Nowadays, approaches for more sustainable and circular food supply 
chains are also eagerly sought. However, the food supply chain has been hit hard by 
the COVID-19 pandemic, which reinforces the requirement to improve the food supply 
chain to support business development. The entire agri-food sector needs more 
attention in the context of the pandemic, as online work cannot be implemented (Sid 
et al., 2021).  

Literature review 



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According to the literature, Short Food Supply Chain is an emerging sustainable supply 
chain experiment that eliminates the intermediaries in complex supply chains and 
facilitates direct connections between farmers and end consumers (Weerabahu, 
Malaarachchi, and Samaranayake, 2021), thus as a promising sustainable alternative 
to industrial agricultural food supply systems (Wang et al., 2022). Lengthy supply 
chains generate high food prices in circulation, resulting in high rates of food waste 
(Lan and Wang, 2013). Moreover, the researchers suggest that direct agricultural 
supply is a feasible and innovative way to reduce the additional costs and loss of food 
supplies (Shi et al., 2011). Upon further inspection, it is founded that short supply 
chains are also applicable to the Chinese environment. Additionally, owing to the 
current slightly chaotic situation in the food industry, the catering industry also urgently 
needs to innovate and improve the food supply chain. Finding innovative methods to 
produce, distribute and consume food is a moral, financial, and environmental 
necessity (Cagliano, Caniato, and Worley, 2016). 

Case Description 

The focused company is the “Chen-Ji-Shun-He (CJSH) beef hot pot”, which has 17 
chain stores, mainly in Jiangsu (corporate website http://www.gzcjsh.com). Its 
advantages are good service, high-quality dishes, and a self-developed digital system 
that predicts demand for dishes, which helps them be in the lead. However, it still has 
some pain points that impede development and expansion. According to field research, 
the group identified the problem in procurement. The problem is that the traditional 
procurement method influences the quality of vegetables and costs. Traditional hotpot 
restaurants use regional distributors to supply vegetables. It has several negative 
impacts. Lan and Wang (2013) support that because the supply chain has many levels, 
the price of vegetables in the circulation link increases, and the attrition rate increases. 
In addition, decentralized suppliers may result in the uneven quality of vegetables 
among outlets. These pain points squeeze the profit margins and influence the 
standardization of dishes.  

The Aims and Objectives 

Focused on pain points, there are two directions of research to solve them: reducing 
procurement costs and improving quality control and employee utilization.  

Research Design 

The research subjects are small and medium-sized Chaoshan fresh beef hotpot chain 
stores with 17 outlets. The group mainly collected data from three stakeholders: hotpot 
restaurants, processing plants, and farms, including the number of vegetables needed, 
selling prices, and transportation costs.  

Table 1: Interviews of different stakeholders 

Field Respondent Business Position 
Business Size 
(Number of 
branches) 



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Hot Pot 
Restaurants Beibei Li CJSH Beef Hot Pot Project 

manager 17 

Processing 
plants 

Shubiao 
Chen 

Suzhou youmile 
Food Co., Ltd Manager 11 

Farms Lv Qing 

Ougennik 
(Kunshan) 
Agricultural 
Technology Co., 
Ltd. 

Manager 1 

Farms Yangyang 
Zhao Yangyang Farm Manager 1 

Farms Guishen 
Zeng 

Xiao Zeng 
Agricultural 
Department store 

Manager 1 

Farms Fengwei 
Chen 

Shanghai Qing 
Agricultural 
Department store 

Manager 1 

Source: Compiled by the Authors. 

The purpose of the interview is to collect data to validate whether our assumptions are 
correct. The interview method is one-on-one semi-structured interviews. Interview 
transcripts are in Appendix A. The group applies the qualitative research method, 
which includes observation and interviews. There are three reasons for qualitative 
research. First, it is difficult to obtain hot pot restaurant operation data for quantitative 
analysis. Second, the interactive method has a flexible structure, where the group can 
follow up on the answers given by the respondents in real time (Rahman, 2016). 
Finally, the group can have in-depth conversations with interviewees to gain more 
industry insights. In addition to the first-hand data obtained from observation and 
interviews, the group also gets second-hand data by searching industry reports. 

Data Collection  

Through interviews, the group obtained the vegetable sales proportion of the CJSH 
hotpot restaurant in June 2021 (see Figure 1). Because the proportion of baby 
cabbages, potatoes, and lettuces account for the majority of the total sales, the 
research focuses on them.  

To compare different methods in Figure 2 and Figure 3, the group calculates costs 
respectively. Cost calculation consists of vegetable cost, transportation cost, and 
processing cost. Detailed data is shown as follows. 



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Figure 1. Sales proportion of different kinds of vegetables in June  

 

Table 2: One day in June’s demand of 17 outlets of 3 kinds of vegetable 

Vegetable 
type 

Sales 
(portion) 

Weight per portion 
(gram) 

June’s demand quantity 

(Half a kilo) (Demand quantity 
per day * 30) 

Lettuce 3619 180 1448 
Potato 4729 240 2522 
Baby 
cabbage 

9729 200 4324 

Ps: Wastage exists and is accounted as 10%; June’s demand quantity = (portions sold 
per day * 30 / 0.9) *weight of portion / 500 

Table 3: The average vegetable price from the supplier of June 

Vegetable type Price (CNY) per half kilo 
Lettuce 2.68 
Potato 1.85 
Baby cabbage 4.93 



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Table 4: The vegetable price from a farm in Suzhou 

A farm in Suzhou Unit price (CNY/half a kilo) 

Lettuce 1.5 
Potato 1.4 

Baby cabbage 1 
  

 

 

Table 5: Processing costs of two schemes 



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Processing type Cost Number 
By labor 4500 per worker (monthly) 1 worker every store 
By machine  24500 yuan per year 1 

Table 6: Transportation costs of new schemes 

Type Cost 
From vegetable base to processing center 400 per day 
From processing center to stores 3.5 yuan per half kilo 

Data Analysis 

Traditional scheme 

The traditional way of purchasing vegetables, shown in Figure 2, is that each outlet 
has its specific supplier. The suppliers would deliver the vegetables each day without 
charging an extra transportation fee as it is inherently contained in the vegetable price. 
Moreover, traditionally, the vegetables are processed manually by an employee at 
each outlet. Based on these, the fee of the traditional purchasing method per month is 
calculated in Table 7. 
 

 

 

 
 
 



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Figure 2: Traditional scheme 

Table 7: Total cost of the traditional method in June 

Vegetable  Unit Price  Demand Quantity for 
June (0.5kg) 

Total Price 
(CNY) 

Lettuce 2.68  1,448  3,881  
Potato 1.85  2,522  4,666  
Baby cabbage 4.93  4,324  21,317  
Aggregate 29,864  
Processing 
Cost  

Unit Price 
(CNY/outlet) 

Number of Outlets Total Price 
(CNY) 

Labor 4,500  17  4500*17=76,500 
Total Cost (CNY) 106,364  

The proposed scheme 

The new purchasing scheme designed by the team (Figure 3) is that the company 
would purchase vegetables directly from vegetable bases like farms and cut the middle 
supplier from making profits. The original centralized beef processing center will be 
equipped with a vegetable washing machine. The washed, cut, and selected 
vegetables would be sent to each outlet together with the beef, which reduces the time 
and labor cost of processing vegetables in the outlet. The cost of the new scheme is 
shown in Table 8. 

 

Figure 3: The new scheme 

Table 8: Total cost of the proposed method in June 



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Vegetable  Unit Price 
(CNY/0.5kg) 

Demand Quantity for 
June (0.5kg) 

Total Price 
(CNY) 

Lettuce 1.5  1,448  2,083  
Potato 1.4  2,522  3,530  
Baby cabbage 1  4,324  4,324  
Aggregate 21,937  
Transportation Unit Price  Quantity for June Total Price 

(CNY) 
Delivery Fee (from 
vegetable base to 
processing center) 

400 
(CNY/Day) 

30 (Day) 400*30=12000 

Delivery Fee (from 
processing center to 
17 outlets) 

3.5 
(CNY/0.5kg) 

1448+2522+4324=8294 
(0.5kg) 

3.5*8294=29029 

Processing Cost  Annual Cost 
(CNY) 

Monthly Cost (CNY) Total Price 
(CNY) 

Machine 24,500  24500/12 2,042  
Total Cost (CNY)     65,008  

Comparison 

In comparison, the proposed method can save 53,356 CNY in total cost (Figure 4). 
Specifically, in the new scheme, thanks to the vegetable machine, the processing 
cost can be reduced by around 74,459 CNY, and the purchasing cost can be saved 
by 7,927 CNY because of the cut middle supplier. However, the new scheme can 
generate transportation costs because the middle supplier and the vegetable farm's 
pricing methods differ. Overall, the main contributor to the cost reduction is employee 
costs.  



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Figure 4: Comparison of the cost of two different scenarios 

Implication 

This study mainly identifies three implications for researchers and small and medium-
sized chain restaurant managers in achieving a sustainable food supply chain. Firstly, 
the research verifies possible cost reduction in raw materials and labor by shortening 
the food supply chain in the catering industry. Compared with CJSH's traditional logistic 
plan, the overall cost of the proposed method would decrease by 53,000 CNY. The 
main contributor to this reduction is the decrease in labor costs through replacing the 
manual labor in each outlet with the vegetable processing machine in the processing 
center. In the global catering industry, raw material cost accounts for 60% of the total 
cost, and personnel cost is predicted to rise with the growing salaries of positions like 



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the chef and the waiter (Grand View Research, 2021). The utilization of the central 
processing center and direct purchase from farms provide a direction for reducing raw 
material and labor costs for small and medium-sized chain restaurants worldwide. The 
proposed scheme could be implemented in small and medium-sized restaurant chains 
in other countries in Asia having similar eating habits and cultures.  

Secondly, this method can increase restaurant operation standardization through 
several cooperative initiatives. In chain hot pot restaurants, one of the qualifications 
emphasized most by managers is standard vegetables with high quality in each outlet. 
In the traditional method, each store is supplied by its nearest supplier, whose 
vegetable quality is unlikely to be controlled the same. However, in the research 
method, the quality could be standardized by purchasing the same bulk of vegetables 
and then distributing the processed vegetable to different outlets. There are also 
opportunities for restaurants to build long-term cooperative relationships with farms to 
improve the stability of the supply chain (Monczka et al., 2016).  

Thirdly, the research method also brings environmental benefits. The main principle of 
the proposed method is to reduce suppliers by centrally purchasing in bulk. The 
reduced purchasing process also implies reduced transportation distance and CO2 
emissions. CO2 emission is also a global issue highlighted by many scholars. Although 
CO2 emissions from global transportation declined by 10% in 2020 compared to 2019, 
it is rebounding and will continue to rise after 2021 (Iea, 2022). With the expected 
growth of carbon emissions damaging the environment, the new procurement scheme 
advocates for shortening transport distance by reducing layers of food supply and 
dispersed transportation, which is beneficial to decreasing energy consumption and 
emissions. Therefore, the research provides possible approaches for enterprises to 
alleviate negative environmental impacts. 

Research Limitations 

Prior to our group's research, limited research had been done on vegetable availability 
in hotpot restaurants, and there may be a lack of appropriate data models to support 
this study. 

Data limitations also exist. The primary data comprising this model's vegetable prices, 
transportation, processing, and labor costs were collected mainly within the Suzhou 
region. These prices vary across regions in China. Additionally, the impact of time was 
not considered in data collection. Transport prices are affected by different seasons 
and weather conditions (Cassady, Jetter and Culp, 2007). Labor costs also rise in 
winter (Fink, Jack and Masiye, 2020). The models in the data may fluctuate 
accordingly, and fluctuations are ignored in this study. 

Finally, the location of the processing plant is fixed in this model, which means that the 
corresponding transport costs are also fixed in the calculations. If the conclusions are 
to be applied to most hotpot restaurants in China in the future, more data will be 
required to support them.  

 



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References 

Aktas, E., & Bourlakis, M. (2020). Food supply chains in cities. [electronic resource]: 
Modern tools for circularity and sustainability (1st ed.). Springer International 
Publishing. 
 
Cagliano, R., Caniato, F. F. A., Worley, C. G., Shani, A. B., & Mohrman, S. A. (2016). 
Organizing supply chain processes for sustainable innovation in the agri-food 
industry. [electronic resource]. Emerald. 
 
Cassady, D., Jetter, K. M., & Culp, J. (2007). Is price a barrier to eating more fruits 
and vegetables for low-income families?  Journal of the American Dietetic 
Association, 107(11), 1909-1915. 
 
Fink, G., Jack, B. K., & Masiye, F. (2020). Seasonal liquidity, rural labor markets, and 
agricultural production. American Economic Review, 110(11), 3351-3392. 
 
Grand View Research (2021, October) Catering Services Market Procurement 
Intelligence Report, 2025. https://www.grandviewresearch.com/pipeline/catering-
services-market-procurement-intelligence-report 
 
Iea (2022, March) Global Energy Review: CO2 Emissions in 
2021.   https://www.iea.org/reports/global-energy-review-co2-emissions-in-2021-2  
 
Lan, T, & Wang, Z. (2013). Analysis and optimization strategy of vegetable supply 
chain. Popular Science /Popular Science, 11, 178. 
 
Li, H., Li, D., & Jiang, D. (2021). Optimising the configuration of food supply chains. 
International Journal of Production Research, 59(12), 3722–3746. https://doi-
org.ez.xjtlu.edu.cn/10.1080/00207543.2020.1751337 
 
Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2016). 
Purchasing and supply chain management. Cengage Learning.  
 
Pullman, M., & Wu, Z. (2021). Food supply chain management : building a 
sustainable future (Second edition.). Routledge/Taylor & Francis Group. 
 
Rahman, M. S. (2016) The advantages and disadvantages of using qualitative and 
quantitative approaches and methods in language “testing and assessment” 
research: A literature review. Journal of Education and Learning, 6(1), 102-112. 
Shi, K, Xu, Z, Xu, W and Liang, L (2011) Discussion on optimization mode of 
vegetable supply chain. Modern Business Trade Industry, 23(22), 24. https://doi-
org.ez.xjtlu.edu.cn/10.3969/j.issn.1672-3198.2011.22.013 
 
Wang, M., Kumar, V., Ruan, X., Saad, M., Garza-Reyes, J. A., & Kumar, A. (2022). 
Sustainability concerns on consumers’ attitude towards short food supply chains: an 
empirical investigation. Operations Management Research, 15, 76–92. https://doi-
org.ez.xjtlu.edu.cn/10.1007/s12063-021-00188-x 



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Weerabahu, W. M. S. K., Malaarachchi, D. N., & Samaranayake, P. (2021). Critical 
success factors in adopting short food supply chain practices under COVID-19: A Sri 
Lankan case study. (2021) IEEE International Conference on Industrial Engineering 
and Management (IEEM), 284–288. https://doi-
org.ez.xjtlu.edu.cn/10.1109/IEEM50564.2021.9672877 
 
Appendix 
 
Appendix A Hotpot restaurants interview 
Q：Are your suppliers scattered? 

A：Yes, by region. At present, each region has a fixed vegetable supplier, but it does 
not rule out changing into a unified procurement and distribution model after the 
establishment of our supply chain system in the future.  
Q：Is the vegetable center a centralized processing place for vegetables? 

A：Yes, the purchased vegetables will be processed, including washing, picking, 
cutting and plastic packaging, and then sent to the store, the store can directly 
produce. This allows for highly uniform standardization. 
Q：Is your company going to build its own vegetable center? 

A：Later construction may be carried out in the factory you visited last time, but this 
is not the company's plan in the short term. 
Q：Where is the specific location of the factory we visited before? We want to 
investigate the cost of self-dispatch transportation. 
A： 

 
Suzhou Youmele Food Company Limited 
Location: Pingan Road, Haozhong District, Suzhou City, Jiangsu Province (From 
Tencent map) 



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Q：What about the price of vegetables? 

A： Price fluctuation table for supplier direct delivery of baby vegetables. 
 

 
Price fluctuation table for supplier direct delivery of potatoes.  

 
Price fluctuation table for supplier direct delivery of lettuce. 



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A：The price of vegetables varies with the seasons and there are grades of 
vegetables. We will require suppliers to provide us with the best quality products, so 
the unit price may be higher than your survey data. 
Q：What is the price of the supplier? 

A：Quotes from different suppliers on vegetables 
 

 
 
 
 
A：This one is a horizontal comparison of prices between our suppliers. After 
referring to the prices, we'll negotiate with the suppliers. 
Q：Well, thank you for taking time out of your busy schedule to interview us. 

A：You're welcome. 
 
Farms interview 
Q: Can you introduce the supply processes from farm to restaurant? 
A: The process is normally as follows.  



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Vegetable bases ---- Jiangqiao vegetable Cargo Center ------ Wholesale markets in 
Shanghai ---- clients 
Generally they directly purchase. Especially, the restaurant could also negotiate the 
transportation fee. 
Q: If we want to reduce supply process of the vegetable supply chain, which level of 
supplier do you suggest we choose?  
A: You can investigate vegetable bases, and the quality is medium to above. The 
price is lower. But some green organic farms have higher prices.    
Q: Is daily delivery possible? 
A: Of course, the requirement is daily delivery. 
Q: The quality of the food is usually the same as the dealer's ? 
A: Pretty much the same. 
Q: Should the price be based on its daily market price or fixed daily price based on 
the average price, if the restaurant has a long term corporation with it? 
A: Long-term cooperation can be discussed, this is a very detailed thing, because the 
price fluctuates every day, so for example, the restaurant will talk about a relative 
price for long-term cooperation. In a general contract, one is to determine the price, 
and the other is to avoid the price risk in case of special circumstances. 
 
Processing factory interview 
Q: I would like to ask if there is a vegetable cleaning machine in your factory. 
A: No, manual cleaning. 
Q: Do you know the price of the vegetable cleaning machine on the market now? 
A: We don't use a lot of vegetables right now, so we haven't gotten to know the price 
yet. 
Q: We are currently doing research, the goal is to reduce the cost of vegetables in 
hot pot restaurants, and we have come up with a plan to transport the vegetables to 
you in a unified manner for cleaning, and then distribute them to each hot pot 
restaurant. Do you think this plan is feasible?  
A: Yes. Now there are some special vegetable companies, they can help clean the 
vegetables and deliver them uniformly. Restaurants can directly purchase clean 
vegetables, ship them to various restaurants, and the restaurant could just simply 
clean the vegetables. However, clean vegetables will cost a lot. Now this industry is 
very competitive, and the price has been compressed quite a lot. Similarly, the cost of 
processing clean vegetables in a food factory will also increase, but you can 
investigate the specific price space to see if it is worthwhile to carry out unified 
cleaning in the processing plant. 
 
Author Notes 
 
Mohan Huo is a junior at Xi’an Jiaotong-Liverpool University, majoring in Supply Chain 
Management. She is interested in the procurement and logistics area of the supply 
chain, and she has two internships at Bosch and Nike. Her email address is 
mohan.huo@outlook.com. 
 
Jie Peng is a junior, majoring in Supply Chain Management at Xi’an Jiaotong-Liverpool 
University. She is interested in supply chain finance. She participated in the 7th GIC 
Conference with a group project, aiming to shorten the food supply chain. Her email 
address is jiepeng773@gmail.com. 
 



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Ke Wu is a junior at Xi’an Jiaotong-Liverpool University, majoring in Supply Chain 
Management. She is interested in the procurement and logistics area of the supply 
chain. Her email address is 13020100118@163.com. 
 
Linxuan Zhang is a student of Intelligent Supply Chain at Xi’an Jiaotong Liverpool 
University. She has researched supply chain technologies, logistics, and procurement. 
She participated in the 7th GIC Conference to demonstrate a group project which is 
related to the food supply chain. Her email address is zlx124509@gmail.com. 
 
Yiao Liu is a junior at Xi’an Jiaotong-Liverpool University, majoring in Supply Chain 
Management. He is interested in supply chain lean management and logistics 
management. His email address is Yiao.liu@outlook.com. 


