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China's austerity push takes a bite out of holiday sales at restaurants

Publication Date : 11-02-2014

 

Restaurants recorded their weakest growth for the Spring Festival in six years as an austerity campaign hit sales, the China Cuisine Association said on Monday.

From Jan 31 to Feb 6, retail and catering industry sales totaled 610.7 billion yuan (US$100 billion), up 13.3 per cent - the slowest growth rate since 2009.

The association said the industry's situation "isn't promising" for at least the first two months of this year, with growth likely to be the same as in January and February 2013.

Ministry of Commerce figures showed that restaurants targeting the mass market recorded sales growth of more than 15 per cent during the Lunar New Year festival, while sales of medium- and high-end restaurants only grew about 10 per cent.

At the lower end of the market, Qing-Feng Steamed Dumpling Shop has been doing well. The decades-old steamed dumpling chain got a sales boost after President Xi Jinping dropped in on one of its restaurants in Beijing in December.

Daily revenue doubled at its nine stores that operated during the holiday.

But high-end eateries had a tough time during the Spring Festival as a result of the government austerity campaign. Many such restaurants adjusted their marketing strategy to offer banquets for weddings, birthdays or family gatherings.

The holiday woes come on top of a declining performance last year for some restaurant groups.

After closing some stores, Beijing XE Flavor Group Co, the first catering company in China to be publicly listed, suffered a loss of more than 500 million yuan last year, according to the company's estimate. In 2012, the high-end restaurant chain had a net profit of 109 million yuan.

The net profit of China Quanjude Group Co Ltd, a famed roast duck restaurant chain, fell 28.4 per cent in 2013, the first decline in five years, with the reduction of high-end customers and bird flu concerns affecting sales.

According to the National Bureau of Statistics, restaurants' revenue expanded 9 per cent in 2013, ending an era of double-digit growth that lasted for 23 years.

Luxury restaurants in first-tier cities have fared the worst, said Tang Qingshun, deputy-director of the China Cuisine Association.

Tang said the catering industry in Beijing had its coldest winter ever this year, with the first decline in 20 years.

 

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