15 February 2019

High-end caterers find new recipe under frugal regime

Among the businesses affected by President Xi Jinping’s {習近平} frugality campaign, China’s high-end restaurants are among those hardest hit. During the week-long national holiday, many high-end caterers trained their promotional drive at families and social gatherings to make up for the shortfall in expensive banquets.

The situation has become critical for some high-end restaurants. Beijing Xiangeqing (002306.CN), once the favorite dining place for Communist Party cadres, has recorded a loss of 220 million yuan (US$35.9 million) for the first half of this year, and has been forced to shut down at least eight outlets.

In its latest report on the catering industry, the China Cuisine Association said combined revenue reached 1.17 trillion yuan (US$193 billion) in the six months to June, representing a moderate year-on-year growth for the sector. However, for high-end caterers, average spending per person slumped 15 to 30 percent in the second quarter, while operating revenue declined 22 percent from a year ago.

Xiangeqing and other high-end rivals like Southern Beauty {俏江南} have reportedly downgraded themselves into mid-range restaurants to attract more diners, and the strategy seems to be working quite well.

Xiangeqing stopped serving expensive liquor, and it scrapped its minimum spending requirement or special charges for private banquet rooms during the “Golden Week” holiday. A “joyful, family atmosphere” has become its new sales pitch to replace “premium dining experience”.

Yao Gang, manager of De Yue Lou {得月樓}, told reporters that diners’ habits have totally changed. They ordered less pricey foods, and spending on beverages shrank significantly as many brought their own wine. “Diners spent more rationally, and they took away their leftovers, too,” Yao added.

Despite the lower average spending, the number of diners surged. De Yue Lou said its revenue during the holiday jumped from a year ago.

And this goes to show that some caterers have found a new recipe to thrive under the go-frugal environment.

– Contact the writer at [email protected]



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