After austerity, restaurants regain their appetite

Those who are having success with such strategies include: Dadong, a Peking duck restaurant chain; Shanghai Min, a Shanghai cuisine chain; Tang Palace, Cantonese restaurant chain; and Wangshunge, a Beijing-based restaurant chain best known for seafood and Cantonese cuisine.

However, Feng stresses that the government's austerity campaign has not been the main driving force behind the high-end restaurants' changes to the way they operate, even if it did trigger the changes.

"Before the government clampdown on public spending in certain areas, high-end restaurants, and the catering industry in general, had reached a point where something had to change, because myriad problems in the industry were disguised by seemingly endless prosperity."

Until the end of 2012, annual growth in the catering industry had been in the double digits for 18 years, the most spectacular of these being 2008, when growth of 24 percent was registered.

However, the main drivers of this exceptional growth, Feng says, were high-end restaurants that were in the grip of a mania that favored fancy new food ingredients, high prices and exorbitant profits rather than good food and reasonable profits. In the long term such growth was unhealthy and unsustainable, he says.

"It's great that restaurants are now a lot more level-headed and have an eye on the great mass of consumers, rather than just a tiny elite," Feng says.

What is happening suggests that Feng is right. While high-end restaurants have to appeal to lower-end consumers because of the highly diminished high-end market, restaurants that focus on low-to-medium market from the start have thrived in the past couple of years.

The most successful ones include Xi Bei Youmian Village, a restaurant chain celebrated for cuisine from rural Northwest China, Meizhou Dongpo, a popular Sichuan-style restaurant chain, and Nanjing Impression, developed from a startup that opened at a downtown tourism destination in Nanjing, Jiangsu province, in 1994.