Food firms chart plans for a strong comeback

The novel coronavirus epidemic cast a lengthy shadow on the catering business, with most operators forced to suspend operations during the period.

Yin Jiangbo had to chart a new plan for the year with a long-term vision while setting aside for now the losses his firm recently suffered.

"It has indeed been a tough time for the catering business, but I remain optimistic," said Yin, the chairman of Guangzhou-based Fashion Gourmet Group.

Several catering brands under Yin's company, including Taotaoju, which focuses on traditional Cantonese food, suspended operations since early February due to the COVID-19 outbreak.

"Rents and labor costs are taken into serious concern after suspending on-site dining service," Yin said, adding the company's loss was estimated to reach more than 30 million yuan ($4.32 million) since the Spring Festival holiday, which began on Jan 25.

To offset part of its business losses, Taotaoju had to open some takeout service counters and Yin searched for bank loans to pay rents and wages for the firm's employees.

"Take-out services are not able to offset the decline of our business. We have always focused on the on-site dining business rather than the take-out service," he said.

Yin's company has become the first batch of catering businesses to resume on-site operations since the local government issued a guideline to gradually reopen on-site dinning services in the city's downtown areas on Feb 20.

"We are looking for an overall resumption of the catering industry. It is an important signal for consumers to boost confidence by going out to dine," Yin added.

The company will open more restaurants nationwide this year to speed up business expansion.

"We will not stop expanding our business and we will keep optimizing our business model, which we consider the key to surviving the tough period," he explained.

Taotaoju will open a new outlet in the provincial capital featuring the dining style of the Qing Dynasty (1664-1991) in the second half of this year.

Apart from expanding the company's major business, the firm is also looking at growth opportunities in other sectors.

Founded in 1998, the Fashion Gourmet Group has developed businesses in catering, dining, tea and healthcare. It has expanded the catering and dining business in several provinces and cities.

Following Yin's company, a growing number of catering companies in Guangzhou have also resumed on-site dining services.

Chinese fast-food chain operator Kungfu has reopened 283 eat-in restaurants across the country, and more than 400 have resumed take-out services as well, the company said. Still, the company expected sales to drop more than 70 percent year-on-year in the first quarter of 2020.

The China Cuisine Association said the epidemic is estimated to have caused losses to the Chinese catering industry of about 500 billion yuan ($71.6 billion) during the Spring Festival holiday (Jan 24-Feb 2), which is normally a peak time for the sector.

The association's report issued in early March said 93 percent of catering companies in China had to suspend operations due to the epidemic.

It will take two to three months for the catering industry to recover, as shutdowns and the outbreak kept diners away and time will be needed to win them back.

"More collaboration with other sectors will be helpful, such as sharing workers to reduce costs, for the catering companies," said Cao Zhiwei, an industry expert in Guangzhou.

Restaurants were encouraged to provide tailored catering services to companies which have resumed operations, Cao said.

"Online food delivery platforms are urged to reduce commissions charged to the catering business to offset the losses following the epidemic," he added.