Catering sector faces challenging times as restaurants close doors

The novel coronavirus epidemic cost the Chinese catering industry 500 billion yuan ($71.6 billion) during this year's Spring Festival holiday (Jan 24-Feb 2), normally a peak time for the sector, according to industry research.

The revenue for the catering industry nationwide in 2019 was 4,672.1 billion yuan, of which 15.5 percent came from the heavy consumption seen during the long holidays.

Compared with the Spring Festival holiday last year, the revenue of 78 percent of restaurants in China dropped 100 percent during this year, a report from the China Cuisine Association said.

Revenue of 9 percent of them dropped more than 90 percent; revenue of 7 percent saw between 70 percent and 90 percent drops; and revenue of less than 5 percent declined by 70 percent, the report said.

Since Jan 21, about 94 percent of the reservations for Spring Festival dinners had been canceled.

Meizhou Dongpo restaurants said a total of 11,144 reservations were canceled between Jan 21-30.The losses for the Sichuan cuisine restaurant chain during the Spring Festival holiday is expected to reach around 17 million yuan, the report said.

Wangshunge, another chain restaurant with 60 outlets, only operated 23 restaurants on Jan 28.Visitor numbers sank 98.49 percent and revenue dropped 93.7 percent compared with the level of the previous year.

The report showed that 93 percent of catering companies suspended their operations due to the novel coronavirus epidemic.

Some 73 percent of the catering companies have closed all of their outlets for the moment, 8 percent closed 80 percent of their restaurants and 7 percent closed less than half of their restaurants.

Only 7 percent of catering companies have continued to keep their business running or operating as group meal suppliers or single stores.

The research said losses were mostly the result of high inventories for the Spring Festival holiday period by restaurants, especially those depending on fresh food. Losses also came from rents, labor and other expenses. Take-out and delivery services were not able to offset the decline of business.

About 23 percent of the interviewed restaurants continue to offer take-out services but have found fewer orders, strict regulations on delivery personnel, and high commissions charged by online delivery platforms.

The association has called for more collaboration with other sectors of the business such as sharing workers to reduce costs for the restaurants.

It is expected to take two to three months for the catering industry to resume their normal operations, the report stated.