Policies planned to boost catering sector

China is readying policies to encourage the use of catering services by ordinary people, which will help to boost consumption and economic growth in the world's second-largest economy, a trade official said on Wednesday.

"Ordinary catering services will be a key area this year and in the near future. We are studying supportive measures to boost consumption," Yao Jian, spokesman of the Ministry of Commerce, told a news conference in Beijing.

He added that the measures will include the improvement of the credit system, industrial regulations and standards, as well as regional catering networks.

Meanwhile, technological innovations, including online services, will be encouraged to enhance the competitiveness of catering firms, while frugal dining styles will still be promoted, Yao said.

"Catering for ordinary people is the most stable and important part of the catering industry, and it remained robust during the economic slowdown and curbs to promote a frugal dining style last year," said the 2013 annual report on the catering industry issued by the China Cuisine Association.

The revenue of China's catering industry has slowed down since 2008. It rose 13.6 percent year-on-year in 2012, compared with the 16.9 percent growth seen in the previous year. Last year's growth rate was the slowest since 1999, except for 2003 when the country was hit by SARS, according to the National Bureau of Statistics.

The growth pace of catering, which accounted for about 11.1 percent of retail sales, has fallen behind the growth of social retail in the last three years.

"China's catering industry is now confronted with unprecedented challenges," Yao said. "2013 will see the industry face more challenges and difficulties than the previous year. And transformation and upgrading have become the top and urgent task for businesses in the industry amid the background of rising costs, declining profits and changing demand."

Yao said that the transformation should include reducing operating costs through information technology, enhancing performance through saving energy and cutting carbon emissions, and sharing resources through the establishment of industrial alliances.

In July, the revenue of China's catering industry increased 9.1 percent from a year earlier while medium- and high-end catering companies saw their revenue decline 2.1 percent, according to the National Bureau of Statistics. The first half of this year saw the revenue of the catering industry rise 8.7 percent year-on-year, falling behind the 12.7-percent growth of retail sales in the same period, according to the ministry.

The rapidly rising costs of ingredients, wages and rents left catering businesses with marginal or no profit, while excessive fees and taxes became a key obstacle for the industry's development, according to the report.

In 2012, the operating, management and financial expenses of the catering industry went up 14.2 percent year-on-year, while the profit of the industry edged up less than 1 percent, according to the ministry.

China's catering industry will "face a reshuffling" with high-end businesses increasing their presence in the ordinary catering sector through strategies such as optimizing their menus, cutting store sizes, launching new brands and speeding up mergers, according to Yao.

"Ordinary catering will see fiercer competition and the quality of the businesses will improve this year," Yao said.

The central government called for a frugal lifestyle across the country in late 2012 and curbed the use of public funds for catering services. High-end catering companies saw a remarkable slowdown in their revenue and profit.

"High-end catering businesses are experiencing a transformation. And that will be a painful and long-term process," said Feng Enyuan, deputy head of the China Cuisine Association.

In the first half, high-end restaurant chain Xiangeqiang Co saw its net profit down about 388 percent from a year earlier, while Shanghai-based Xiao Nan Guo Restaurants Holdings Ltd, another high-end catering firm, witnessed a drop in net profit of 43.3 percent year-on-year.