Slowdown in economy hits China's restaurants

China's Restaurant Industry Crisis: Closures, Price Wars, and Deflation

Key Concepts: Restaurant closures, deflationary pressure, price wars, consumer spending decline, cost-cutting measures, government intervention.

Restaurant Closures and the "Restaurant Undertaker"

The Chinese restaurant industry is facing a crisis due to declining consumer spending, rising costs, and deflationary pressure. Millions of restaurants closed in the past year. The number of dissolved catering companies reached a historic high of almost 3 million nationwide. An entrepreneur, referred to as the "Restaurant Undertaker," makes a living selling second-hand kitchen equipment from dismantled restaurants. His business has seen a 270% increase in activity in 2024, dismantling 200 restaurants per month.

Price Wars and Profitability

Many restaurants are slashing prices to stay open amidst fierce competition. This price war is squeezing businesses and cutting into profits, leading some owners to believe they won't survive much longer. February inflation dropped at its fastest pace in over a year, raising fears of a deflationary spiral.

Impact on Food Quality and Consumer Concerns

To survive, many restaurants are cutting costs, sometimes by using cheaper ingredients. This raises concerns about the impact on food quality for consumers.

Government Intervention and Future Outlook

Officials have promised action to curb excessive competition. However, this help may come too late for many struggling restaurants. As China's economy slows, restaurants face tough choices: stay afloat or shut down.