Beijing's Frugality Campaign Hits High-End Restaurants

    It's not just makers of high-priced baijiu that are taking a hit from Beijing's ongoing frugality campaign and a military ban on extravagant banquets.
    Jing Daily
    Jing DailyAuthor
      Published   in Macro

    High-Priced Restaurants Seen Revenue Drop 15-20 Percent Since December#

    It's not just makers of high-priced baijiu — traditional Chinese spirits -- that are taking a hit from Beijing's ongoing frugality campaign and a military ban on extravagant banquets. High-end restaurants, too, are reporting a battering in the first two months of 2013 as money for government-funded banquets dries up. According to the Chinese Ministry of Commerce, the country's catering industry saw a dip in revenue of 4.9 percent in January and February, growing just 8.4 percent, its lowest level in a decade. Medium- to high-end dining was the hardest-hit segment, with revenue falling 3.3 percent during the period.

    As Bian Jiang of the China Cuisine Association told China Daily this week, weak sales in 2013 only serve to pile additional woes on high-end restaurant owners. According to Bian, revenue for this segment is estimated to have dropped 15 to 20 percent since December, being particularly hard-hit by cutbacks in business banquets in the run-up to Chinese New Year.

    Via China Daily:

    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 response to the drop in business diners, some high-priced restaurants -- particularly in Beijing -- are making stronger overtures to families and individual diners, retooling menus and adjusting prices. As Bian told China Daily, he expects the high-end segment to recover after April, "boosted by people's rising incomes and the growing number of restaurants shifting focus from business clients to the general public."

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