In mainland China’s restaurant industry, the downturn in hotpot restaurants has continued for at least two years. The founder of Shanghai Paixu Cultural Communication Co., Ltd. stated that currently, the business of every hotpot restaurant is very poor, with the average customer spending decreasing by 30%.
Recently, an article on Sohu Public Account mentioned that at the beginning of 2024, the restaurant market, particularly hotpot, tea, and bakery shops, faced a severe situation. Within a month, 42 hotpot restaurants were shut down and their equipment recovered by recycling businesses. This phenomenon is not just about numbers but also reflects the huge challenges the entire restaurant ecosystem is facing.
The growth of hotpot restaurants has significantly slowed down, and the number of registered enterprises in popular sectors like hotpot and tea has decreased substantially. The registration volume for bakeries and tea shops has also dropped by about 30% compared to the previous year. The trend of new entrants cutting back highlights the saturation and the tough competition in the market.
According to several second-hand equipment recycling businesses, this year’s operating environment is drastically different from previous years. Last year, the turnover speed for equipment recycling only took two to three days, but now it has extended to a week.
Shen Shuaibo, identified as the founder of Shanghai Paixu Cultural Communication Co., mentioned on August 28th that hotpot restaurants are currently facing mass closures. The hotpot market is experiencing severe oversupply.
Recently, he visited Chongzuo City on the Guangxi border, where a shopping mall housed eight hotpot restaurants. The floor was filled with hotpot restaurants as far as the eye could see.
“Many hotpot restaurants with an average spending of over 80 yuan no longer require waiting in line. During meal times, only about a third of the seats are occupied.”
He said that he has a friend who specializes in supplying goods to famous chain hotpot restaurant brands. He noted that the business of hotpot restaurants nowadays is not just slightly poor but almost every one of them is struggling. Customers now prioritize cost-effectiveness in their purchases. Therefore, hotpot restaurants have introduced more affordable and lower-priced products.
Shen Shuaibo added that hotpot restaurants are meant to be a popular and affordable dining option, but many establishments have failed due to uncontrollable costs stemming from various business models.
Since the pandemic lockdowns, physical businesses in mainland China have faced challenges. Over the past two years, even hotpot restaurants owned by celebrities in China have been closing down.
Shen Shuaibo pointed out that the success of hotpot restaurants does not necessarily rely on the celebrity status of their owners.
“Nowadays, a 30% decrease in average customer spending across the hotpot industry is quite normal.”
The average customer spending refers to the average amount spent by each customer. This metric is usually used to evaluate a business, and a decrease in average spending signifies a reduction in customers’ willingness or ability to spend.
He mentioned that a research report on the current status and prospects of the Chinese hotpot industry in 2023 revealed that by the end of that year, there were over 600,000 hotpot restaurants nationwide, with 30,000 closures recorded throughout the year.
Data from “Qichacha” shows that in the first quarter of 2024, 12,700 hotpot businesses were deregistered or revoked in China, and by the end of the first five months, 26,600 shops were closed. It indicates that the industry is now in a phase of “elimination.” Smaller establishments are either being forced out in price wars or struggling to survive without participating, illustrating the current tough state of the hotpot industry.
The chilling effect of the Chinese economy is impacting various industries. This week, Taiwan’s renowned catering group Din Tai Fung announced the closure of 14 stores in North China before October 31st.
Taiwan’s Premier Su Tseng-chang commented that Din Tai Fung is known for its quality and service. He highlighted that Din Tai Fung’s decision reflects the changing economic landscape in mainland China, different from when the brand initially invested in the country.
Premier Su Tseng-chang stated in an interview on August 27th that since the pandemic, China’s development has not been favorable. Internally, there is a need to revive the economy, while externally, there is a display of power, conflicting paths that can hinder the nation’s progress if not addressed properly.
Currently, there is a lackluster consumer mood in mainland China, marked by waves of unemployment, salary reductions, and store closures. As people struggle financially, downgrading their consumption becomes an inevitable choice. In this wave of consumption downgrade, people are realizing a simple truth: no matter how diverse the dining options, ultimately, they are just about filling the stomach.