Austerity push closes high-end restaurants

People walk past the logo of XE Flavor in Beijing, March 24, 2013. XE Flavor Group Co, the first publicly listed catering company in China, said on Thursday it was closing down the restaurants in an effort to reduce losses.[Photo by Wu Changqing/Asianewsphoto]

As the austerity measures launched by the Chinese government start to bite, a major restaurant chain announces plan to shut down five restaurants in Beijing.

XE Flavor Group Co, the first publicly listed catering company in China, said on Thursday it was closing down the restaurants in an effort to reduce losses.

"The high rents and high labor costs required to keep the brand image alive make it very difficult for the company to earn profit and expand our customer base," XE Flavor said in a statement.

XE Flavor, which is known for its high-end restaurants, suffered a loss of more than 500 million yuan ($82 million) last year, according to the company's estimate. In 2012, the high-end restaurant chain had a net profit of 109 million yuan.

The five restaurants that the company is now planning to close down have been out of business since early August 2013, after posting individual losses of up to 2.4 million yuan. Another restaurant facing downsizing lost 14.7 million yuan last year.

XE Flavor, founded in 2007, went public on the Shenzhen Stock Exchange in 2009 as the first listed catering company in China. Shares of XE Flavor slipped 1.6 percent to 6.2 yuan on Thursday.

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