Appetite for upscale dining weakens

Sales at China's high-end restaurants slumped in the first two months of the year, reflecting the sluggish state of the catering industry since the start of the nationwide crackdown on waste and extravagance in December.

The Ministry of Commerce announced on Tuesday that the catering industry's revenue growth declined 4.9 percentage points to 8.4 percent between January and February, the lowest level since 2003.

Medium and high-end restaurants are bearing the brunt of the slump, with their revenue falling 3.3 percent in the first two months of this year, the ministry said.

Bian Jiang, assistant director of China Cuisine Association, said high-end restaurants' revenue is estimated to have fallen by 15 to 20 percent since December, due to a cutback in number of business banquets.

High-end hotels, foodstuffs and liquor all saw a big decline in sales during Spring Festival.

Statistics from the Ministry of Commerce showed that sales at top hotels in Zhejiang province fell 20 percent year-on-year during Spring Festival.

Spring Festival dinners this year had smaller portions to save costs, and free packaging services were provided by restaurants to encourage customers to take their leftovers home.

The post-Spring Festival period used to be peak time for business banquets when companies celebrated the reopening of their businesses in the New Year, Bian said.

"This year there were hardly any such banquets or gatherings," he said.

In contrast with the gloomy situation for high-end catering businesses, restaurants targeting the general public have grown quickly.

A hotpot restaurant in Beijing with only eight tables increased its revenue by 20 percent during Spring Festival, according to the association.

Fast-food chains and food vendors at shopping centers have also seen large numbers of customers.

Bian predicted that the industry's growth momentum will return after April, boosted by people's rising incomes and the growing number of restaurants shifting focus from business clients to the general public.

Beijing Xiangeqing Co Ltd, a restaurant chain targeting mostly high-end business customers, has developed fast-food products.

Meng Kai, chairman of the restaurant group, told China Economic Times that it had stopped selling high-end seafood products and adjusted the ratio of its high and low-end products to attract general customers.

It now focuses on occasions such as family gatherings and weddings.

Bian said the change to attract more non-business customers doesn't mean a slump in revenue as more people are now willing to spend more for quality meals.

He cited Beijing-based DaDong Food & Beverage Investment Ltd Co as an example. The revenue of the renowned Beijing roast duck restaurant has continued to grow this year fueled mostly by non-business clientele, Bian said.

"The slowdown in the industry is a good way to encourage an upgrading and reshuffle of businesses," he said. "Those with unique characteristics and quality products will shine."