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Brief Published: 13 Feb 2013

China’s Restaurants Hit By Government Austerity


Restaurants in China have reported cancellations and losses after Communist Party chief Xi Jinping launched an austerity drive. It demands government agencies and state-owned companies put an end to extravagance – including the lavish banquets held during business negotiations. 

According to research published by the China Cuisine Association (CCA) in February 2013, 60% of the 100 restaurants surveyed had experienced recent booking cancellations, with one Beijing-based outlet reporting an 80% drop in sales. Almost two-thirds believe market growth will be less than 10% or flat in the next year.

Banquets, usually held in high-end restaurants, are a traditional feature of gift giving and are commonly used to conduct Chinese business meetings. However, they come at great expense, both financially (costing the government $48bn in 2011, according to international digital newspaper The Global Post), and environmentally. Chinese state newswire Xinhua has alleged that China throws away enough food every year to feed 200 million people – much of which comes from excessive banquets. Read more about food-waste consciousness in China in Global Food and Health Trends 2013-14

The future looks brighter for China’s $70bn fast-food market, which, according to the CCA survey, is expected to grow by more than 15% in 2013. With government austerity measures in place, restaurants in China must quickly retune their business strategies and target individual diners rather than focusing on corporate groups. Read more about the rise of fast-casual dining in Future Fast Food.