Trimming the fat
Faced with a government austerity campaign and some jitters about the economy, many high-end restaurants in Beijing were challenged to change or die. Ye Jun reports.
High-end restaurants cut costs and expectations in an austerity-conscious year.
The past year has been especially difficult for high-end restaurants in Beijing. Many top Chinese restaurants either closed down or have tried to reinvent themselves for a downscale market. At the same time, some middle and low-end eateries have sustained good business. The closing of Maison Boulud at Qianmen 23 on Dec 8 came as a shock to many gourmets in Beijing. Just three months ago in September, NewYork-based founder Daniel Boulud himself was in town to celebrate its fifth anniversary. The restaurant had a good reputation and won plenty of media awards for both food and service.
Recently its managing company put up a notice, saying the restaurant lost a total of 245 million yuan ($40 million) by the end of 2012. It has been widely posted on Sina Weibo micro blogs and WeChat. The notice says the reason the restaurant lost money is because costs far exceed income.
Damien Alvarez, general manager of Maison Boulud for the past year, confirms the authenticity of the notice. But he says the restaurant has enjoyed good business in the past year.
“People who came could see it was a busy place,” he says.
He says he is still working with the company. “We hope to move to a new location. But nothing is certain yet.”
Ignace Lecleir, general manager of the popular Temple Restaurant Beijing, says the closing of Maison Boulud is “not so good”, because “it’s nice to have friendly neighbors”. Lecleir worked as general manager with Maison Boulud 2.5 years ago, before moving on to his current project.
However, Lecleir thinks “things are positive”. “The only pressure is to make sure we can satisfy our customers and deliver good service,” he says.
Bian Jiang, deputy director of the China Cuisine Association, said in an interview early this year that taxation, rent and labor costs have kept rising, making it increasingly difficult for restaurants to make profits.
Managers of some high-end Chinese restaurants feel it has been a particularly tough year.
“I’ve been working in the restaurant business for 20 years. It has never been as difficult as this year. I’ve never made so much effort,” says Zhang Guijin, general manager of JingYa’sHuangsi branch.
Jing Ya, a restaurant known for its Shandong-style seafood buffet, attracted attention in the past year because its target customers included government and military officials. It was among the restaurants hit the hardest after the Chinese government issued policies to curb waste and extravagant spending of public funds.
“March to June were the worst. July and August were a little better,” Zhang says. “October was bad again. But November and December have seen a little rise.
“In terms of the number of customer visits, the past three months were basically the same as last year’s,” she says. “But the average spending has dropped by half.” The average bill at the restaurant now is 200 yuan per head.
Zhang says the restaurant has been working on management, and redefining its menu to cater to a new group of customers. The restaurant group has opened middle- and lowend hot pot restaurants, snack shops and convenience carriages near subway stations to sell take-away foods.
“We have lowered the price range at our high-end restaurants, and shifted products from high to middle and lower levels”, which will benefit everyday diners, she says.
Xiang E Qing is another high-end chain restaurant group that was hit hard by policy changes in the past year. It has introduced mediumpriced fast food stores, shifted to group catering and started to give a 50-70 percent discount for group diners.
Shun Feng, a Cantonese seafood restaurant, has started to offer set menus at promotional prices and an afternoon tea. The attraction: An affordable meal in a high-end environment with good service.
But some restaurants have seen a rise in business, and they have even taken the opportunity to expand.
Meizhou Dongpo, a Sichuan chain restaurant aiming to offer “what common people like to eat”, recorded an 8 percent increase in business over the previous year from January to May, according to Guo Xiaodong, deputy general manager.
Meizhou Dongpo now has more than 80 branches offering a regular menu and its specialty hot pot and snacks. The restaurant has been busy opening new outlets in relatively out-of-the-way areas, such as Beijing’s Yizhuang and Huairou. Its prosperity forms a huge contrast with the austerity many high-end restaurants are facing.
Da Dong Peking Roast Duck restaurant recently opened a new branch near the Worker’s Stadium and plans another one soon in Haidian district.
A veteran gourmet in Beijing, who prefers to be quoted as “Mr Liu”, explains that Da Dong mainly targets business customers, a group that is less affected by China’s policy change for government spending.
Liu says restaurants targeting “common people” will continue to make money. HaiWan Ju, for example, specializes in Beijing’s typical noodles with fried brown sauce, or zhajiangmian, and home-style dishes. A bowl of its famous zhajiangmian cost 8 yuan 10 years ago; now it costs 25 yuan. But the long queue waiting to be served at the restaurant has not subsided.
“Restaurants were greatly affected by government policies. But now it is time that market rules and rational consumption fall into place,” says Liu.
Maison Boulud’s former general manager Alvarez thinks the atmosphere for high-end restaurants has been “stable” over the past two years, and people “still have interest” in those eateries.
Jing Ya’s Zhang Guijin says the crisis of the past year has offered a chance to change and improve. She hopes to take off the restaurant’s “hat” of a highend eatery and change people’s concept of Jing Ya to a business catering to ordinary people.
Enterprises fail, but the overall hospitality industry does not, she says. “The restaurant business is still hopeful and rising. I believe Jing Ya will emerge from the crisis.”