In recent times, China’s economy and consumer power have been continuing to decline, leading to a harsh winter for the catering industry. In the first half of this year alone, over 30,000 noodle shops and more than a million dining establishments have shut down. Interestingly, during the same period, food delivery and takeout personnel in Beijing saw a 49.7% increase. Analysts attribute this shift to changes in consumer habits brought about by the three-year pandemic, leading to a transformation in the overall market structure.
According to data from Qichacha, as of May this year, there were 31,000 registered noodle shops in China, while 29,000 had been deregistered or closed. It’s not just small eateries feeling the pinch; even high-end restaurants have been closing down one after another. Eateries like Chú MODERN CUISINE in Chengdu, TIAGO and Opera BOMBANA in Beijing, L’Atelier 18 and KOR Shanghai in Shanghai, as well as Osteria and others have either halted operations temporarily or shuttered for good.
Statistics reveal that by June 30th this year, over 1.056 million catering businesses had deregistered or been dissolved in the first six months, almost matching the total from the previous year.
Moreover, prominent dining brands are experiencing losses as well. For instance, popular tea chain “Naixue’s Tea” is expected to incur losses between 420 million to 490 million yuan, while the chain restaurant “Hotpot Hotpot” is facing losses of at least 260 million yuan. Even coffee giant “Luckin Coffee” has seen its profits halved compared to the same period last year.
Renowned political commentator, Chen Pokong, shared in an interview with Radio Free Asia that the bleak situation in China’s catering industry is linked to the economic downturn among civil servants.
He highlighted the division of China’s economy into governmental and civilian sectors, noting that high-end eateries often catered to civil servants who are reducing their spending due to factors such as salary cuts or non-payment. He elaborated that the middle-class has also been weakened, causing a contraction in consumer spending and contributing to the large number of closures within the food industry.
According to the report “Main Economic Indicators of Accommodation and Catering Companies above Quota,” during the first half of 2024, the operating income of the catering industry declined by 2.9% compared to the same period last year, with operating costs down by 1%. The total profit plummeted significantly, witnessing an 88.8% decrease.
The report further highlighted that despite facing challenges, the number of industry employees saw a marginal increase of 2.9% overall. Particularly in the field of food delivery and takeout, there was a notable spike in the workforce by 49.7%, reflecting the sustained high demand for these services during the pandemic.
A Beijing resident, Mr. Guo, speaking to Radio Free Asia, expressed the current difficulty in finding employment. He mentioned a shift in the workforce demographics towards food delivery services, with individuals from various backgrounds, including former mid-level or senior executives from state-owned or private enterprises, entering the delivery sector due to economic hardships.
Mr. Guo pointed out the allure of this industry because every delivery earns a fee, be it a small or substantial amount, making it an attractive option for many in the challenging economic climate. He highlighted that previously considered menial jobs are now being sought after by locals, thereby increasing competition in the market.
Online reactions reflected these sentiments. User “Guazaozi 2010” commented, “Unemployed individuals are now moving towards platforms like Didi and food delivery,” while user “Super Pattern” remarked, “People have to eat; food delivery doesn’t discriminate.” User “Wanglushan” expressed a mix of surprise and resignation, stating, “The 49.7% increase in personnel should have been those dining luxuriously on takeout.”