High-End Restaurants Lower Prices and Close Stores as Industry Landscape Evolves (AI Translation)
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文｜财新周刊 孙嫣然
By Caixin Weekly's Sun Yanran
美食博主韦恩突然发现，曾经需要提前预约的高端餐厅已经即到即食，包括自己在内，年轻人尝试千元餐饮的热情正在消退。“出境游开放后，出国吃高级餐饮性价比更高，分食了部分国内市场的蛋糕。”韦恩表示，消费者少了，厨师的创作热情也受到影响，“精致餐饮突然没意思了”。
Food blogger Wayne suddenly noticed that the once high-end restaurants, which required advance reservations, are now walk-in and dine. He observed that young people's enthusiasm for trying thousand-yuan meals is waning, including his own. "With the opening of outbound travel, the cost-effectiveness of dining at high-end restaurants abroad is higher, taking away part of the domestic market share," Wayne said. With fewer consumers, chefs' enthusiasm for creativity has also been affected. "Fine dining has suddenly lost its appeal," he added.
所谓高端餐饮（Fine Dining），一般指各式人均价格超过千元的餐饮类目，以西餐、日本料理（下称“日料”）、粤式餐饮、私房菜等居多。
Fine dining typically refers to categories of dining where the average cost per person exceeds one thousand yuan. This category is predominantly composed of Western cuisine, Japanese cuisine (hereafter referred to as "Japanese food"), Cantonese cuisine, and private kitchen dining.
2023年以来，伴随着商务宴请减少、商场人流下滑、居民非必要消费支出减少，高端餐饮市场首当其冲，长租约模式下短期内很难获得商业地产租金下降的成本缩减，两相挤压，2024年知名餐厅频传闭店消息。
Since the beginning of 2023, accompanied by a reduction in business banquets, a decline in shopping mall foot traffic, and a decrease in non-essential consumer spending, the high-end dining market has been hit hardest. With long-term leases, it is challenging to obtain immediate cost reductions through lower commercial real estate rents. Under this dual pressure, renowned restaurants have been frequently announcing closures as we move into 2024.
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- High-end restaurants in China are experiencing a significant decline in customer demand due to increased outbound travel, reduced business banquets, and cautious consumer spending.
- Many high-end establishments, including well-known brands, have closed, introduced lower-priced sub-brands, or shifted to smaller locations with reduced costs.
- The fine dining market faces further challenges from ingredient supply chain disruptions and shifting consumer preferences towards more affordable dining options and beverages.
Food blogger Wayne noticed a shift in high-end dining trends, with previously reservation-only restaurants now allowing walk-ins, reflecting a declining interest among young people in expensive meals, including his own. This tendency results from the opening of international travel, making high-end dining abroad more cost-effective and affecting the domestic market share, creativity among chefs, and consumer interest in fine dining [para. 1].
Fine dining typically involves an average cost per person exceeding one thousand yuan, with Western, Japanese, and Cantonese cuisines, as well as private dining, being predominant. Since 2023, reductions in business banquets and shopping mall foot traffic have detrimentally impacted the high-end dining sector, leading to numerous closures, including the notable shutdowns of Refer and TIAGO Western restaurants in Beijing, Opera Bambana, and more [para. 2][para. 3][para. 4].
Data from Hongcan indicates that as of July 2024, Shanghai’s restaurants with average spending over 500 RMB per person reduced by over 1,400 establishments compared to May 2023. Mintel reported a decline in consumer enthusiasm for high-end dining as of February 2024, signifying a shift from previous years [para. 5][para. 6].
Xinrongji, a Michelin three-star restaurant in Beijing, is rumored to close due to corporate restrictions on reimbursable dining expenses among state-owned securities firms, despite assertions of continued operation [para. 7][para. 8]. Chain restaurants have responded to weakening demand with short-term discounts and set meals, although high-end establishments struggle with such pricing strategies due to high material and labor costs [para. 9][para. 10].
The fine dining sector faces an oversupply issue, with the food and beverage industry in general experiencing growth post-pandemic. However, this has led to intense competition and market saturation, resulting in diminished foot traffic and revenue, particularly in luxury dining establishments [para. 11][para. 12][para. 13]. The proliferation of new dining businesses and the corresponding increase in closures illustrate significant sectoral competition and homogenization [para. 14][para. 15][para. 16].
High-end dining has seen a considerable decline in per-customer spending and foot traffic, as observed in brands like Song Hotpot and Tai Er. Meanwhile, lower-cost dining options maintain high activity levels, reclaiming market share from pricier counterparts [para. 17][para. 18]. This trend of budget dining is reflected in the increasing share of low-ticket price categories in new dining establishments [para. 19].
In response to declining revenues, high-end restaurants are reducing expansion and focusing on training, reflecting a broader industry need for substantial market exits to restore health [para. 20].
High rent and operational issues have precipitated abrupt closures of several notable establishments, such as TIAGO and Opera Bambana, due to internal conflicts and declining patronage [para. 21][para. 22][para. 23].
Some high-end restaurants have adapted by downsizing and introducing sub-brands with lower prices to attract younger patrons and adjust to market changes [para. 24][para. 25][para. 26][para. 27]. Diversification and emphasizing affordable, quality-oriented dining options reveal a significant shift towards rational consumer behavior [para. 28][para. 29].
The industry is also seeing a strategic pivot to international markets, with notable expansions by brands like Yongfu and Xinrongji into regions with high demand for sophisticated Chinese cuisine, despite significant logistical challenges [para. 30][para. 31][para. 32].
Supply chain disruptions, particularly in high-end Japanese cuisine due to nuclear wastewater controversies, have compelled restaurants to seek alternative sourcing strategies [para. 33][para. 34][para. 35][para. 36]. Adjustments in alcoholic beverage offerings further underscore the trend toward more affordable dining experiences [para. 37].
Overall, the catering industry, influenced by broader economic factors, witnesses significant structural adjustments and market stratifications as it adapts to changing consumer behaviors and economic landscapes [para. 38][para. 39][para. 40][para. 41][para. 42][para. 43][para. 44].
- Xin Rong Ji
新荣记 - Xin Rong Ji, a Michelin three-star chain restaurant, faced rumors of its Beijing Financial Street location closing in 2024 due to the financial industry's salary cuts and reduced business banquets. However, the restaurant confirmed it's operating as usual. Additionally, in May 2024, Xin Rong Ji expanded internationally by opening a new location in Tokyo, Japan.
- Jiumaojiu
九毛九 - Jiumaojiu (09922.HK) operates mid-range restaurant brands. In Q2 2024, its high-end hotpot brand "Song" saw a decrease in per capita spending by 17 RMB to 104 RMB, a drop of over 14%. Their lower-priced brand "Tai Er Pickled Vegetable Fish" saw a 6 RMB decrease to 69 RMB per capita and has introduced promotional discounts.
- Xiabuxiabu
呷哺呷哺 - Xiabuxiabu (00520.HK) operates both high-end hotpot brand CouCou and a lower-priced main brand. In 2023, CouCou's per capita consumption dropped to 142.3 yuan, a 5.7% decrease, while the main brand's per capita consumption fell to 62.2 yuan, a 2.7% decrease.
- Haojiu Hao Cai
好酒好蔡 - Haojiu Hao Cai is a high-end restaurant brand that introduced a lower-priced sub-brand named ChaoMu CHIU in Hangzhou, reducing its average per capita spending from around 2500 yuan to 500 yuan. This strategy aims to attract more customers amidst declining demand for high-end dining.
- Hai Gui Hai Group
海归海集团 - Hai Gui Hai Group, a high-end restaurant operator, faced a downturn, prompting it to launch lower-cost sub-brands, such as Qiao Dong Bei with a per capita consumption of approximately 200 Yuan. Their high-end brands include Chao Shang Chao and Lu Shang Lu. To adapt to economic changes, they are shifting focus to more affordable dining options to attract a broader customer base.
- Yongfu Catering Group
甬府餐饮集团 - Yongfu Catering Group, founded by Wen Yongjun, specializes in fine Ningbo cuisine with 35 locations across China. They operate with distinct price tiers through brands like Yongfu, Yongfu Zunxian, and Yongfu Xiao Xian. They received Michelin one-star ratings for their flagship restaurants in Shanghai and Hong Kong. In 2024, they expanded internationally to Singapore, targeting affluent Chinese diners.
- Xibei Restaurant Group
西贝餐饮集团 - Xibei Restaurant Group, headed by Jia Yukun, has entered the "small tavern" sector with Zhuangzhuang Tavern in 2021, offering northwest cuisine centered around lamb. Their first branch, open for two years, maintained under 10% profit, and in 2024, they launched a second branch in Beijing as part of their expansion amidst shifting consumer preferences.
- Since the beginning of 2023：
- High-end dining market experienced significant challenges due to reduction in business banquets, decline in shopping mall foot traffic, and decrease in non-essential consumer spending.
- By May of 2023：
- High growth in foot traffic to physical stores interrupted by consumption downgrade.
- The first eight months of 2023：
- 780,000 dining businesses deregistered, surpassing the total number of closures in 2022.
- September 2023：
- Liquor distributor Shi Xin closed his small tavern due to decreased customers.
- Since 2024：
- Chain restaurant enterprises resorted to short-term price cuts and discounts on set meals.
- New Year's Day 2024：
- Refer, a well-known Western restaurant in Beijing, closed its doors.
- Early February 2024：
- Survey by consulting firm Mintel showed decline in proportion of consumers 'very eager' for high-end restaurants.
- The first half of 2024：
- Year-on-year growth rate of revenue for catering enterprises adjusted down to 5.6%.
- The first half of 2024：
- Retail property rents in core business districts of Shanghai, Guangzhou, and Shenzhen declined.
- Moving into 2024：
- Renowned high-end restaurants frequently announced closures.
- By the first half of 2024：
- High-end Chinese restaurant group Yongfu Catering Group experienced an 18% decline in overall revenue.
- April 2024：
- TIAGO, an established Western restaurant in Beijing, announced closure of all its six stores under four brands without notice.
- April 14, 2024：
- Opera Bambana, a Michelin one-star Italian restaurant in Beijing, shut down due to overdue rent payments.
- April 22, 2024：
- KOR Shanghai, a lounge restaurant in Shanghai, ceased operations.
- May 30, 2024：
- Shanghai's Osteria, an oyster and seafood restaurant, closed its doors.
- As of July 21, 2024：
- Restaurants in Shanghai with an average consumption of over 500 RMB per person accounted for 0.59% of the total.
- 2024：
- High-end restaurants began shifting target demographics and exploring new market strategies.
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