This article was originally published by Radio Free Asia and is reprinted with permission.
China has seen nearly 3 million restaurants, cafes and other catering outlets shut down in the past year, according to industry website Hongcan, with many going bankrupt and even hugely popular chains slashing costs by shutting down hundreds of stores.
In early December, top Taiwanese chicken house Zhenghao Da Da went viral on Weibo after it announced it would shutter all its stores in China, starting with the flagship outlet in Shanghai’s New World City Plaza mall.
But the announcement was just “the tip of the iceberg,” according to a Jan. 21 analysis published on Hongcan’s website.
“‘Contraction’ and ‘stores closing’ were the new buzzwords for the catering industry in 2024,” the article said. “The negative news just kept on coming, and the sense of chill was overwhelming.”
The closures have been seen across all sectors of the industry, from fine dining to cafes, bakeries and hot pot chains to snacks and fast food.
Even high-end Western fine-dining outlets have been hit by bankruptcy, absconding owners and unpaid wages, “in an extremely embarrassing manner,” the article said, citing the closure of Beijing-based Michelin-starred Italian restaurant Opera BOMBANA, which shut down in April 2024 while still owing its staff wages and suppliers money.
L’Atelier 18, a French restaurant on the Bund in Shanghai with a three-Michelin-star chef shut down after only six months in operation, while Paul Pairet at Roodoodoo also shut its doors less than a year after its opening, according to a list of high-profile closures compiled by Redcan.
Tea shops hit hard
Snacks, baked goods and beverages have been equally hard hit, though, with milk tea store Taigai, Jixu Fresh Fruit Coffee and Thank You Tea all shuttering multiple stores through the year, the list showed.
Tea chain Cuonei Village slashed its stores from nearly 500 across more than 80 Chinese cities to less than 50 stores by early December, while Fu Xiaotao and Yuan Zhenzhen Milk Tea have dropped from more than 300 stores apiece to just a handful.
Diners who once piled the shrimp high at Xiamen’s fancy seafood buffet chain Haidinghui have been left out in the cold, while Japan’s Mos Burger exited the Chinese market, closing six outlets in June.
Hotpot chains Just Thai, Xianhezhuang and Panda Lao Zao have all slashed the number of their outlets.
The report cited “more rational” behavior from consumers, increasing global uncertainty and the “shrinking assets of the middle classes” as the driving force behind the mass closures.
Flagging economy to blame
A current affairs commentator from the eastern province of Zhejiang who gave only the surname Lu for fear of reprisals said the industry has been hit from all directions.
“On the demand side, there has been weak domestic economic recovery since the ending of pandemic restrictions,” Lu said. “The assets of the middle classes are shrinking, civil servants are owed wages, and a lot of ordinary people are unemployed.”
“This means consumption has become more rational and focused on value for money and demand more rigid, while high-end catering and internet celebrity restaurants have been hit hard,” he said. Internet celebrity restaurants are eateries that are popular online and attract customers through mass exposure.
A resident of the eastern city of Taizhou who gave only the surname Wang for fear of reprisals said the impact on the street is highly visible where he lives.
“A lot of restaurants in Taizhou have shut their doors, including a lot of long-established ones,” he said.
“Some that were open for only four or five years have also closed.”
The outlets that are still booming are those frequented by government officials and departments, according to Wang.
Online commentator Lao Zhou said the sector has also been hit by rising rents and prices for raw materials.
But mostly, it’s about the flagging economy.
“The closure of restaurants shows us that ordinary people have no money in their pockets,” Lao Zhou said. “Who’s going to go eat in a restaurant if they have no money?”
