High-end dining hit hard amid frugality campaign

BEIJING - High-end restaurants and starred hotels have been hit hard amid a government frugality campaign that has swept across China, an industry report showed Thursday.

As much as 60 percent of restaurants, mostly upscale ones, said they have seen reservations canceled after the Communist Party of China (CPC) Central Committee promulgated a package of rules calling for official frugality, according to a survey conducted by the China Cuisine Association (CCA).

A five-star hotel in Beijing reportedly lost nearly ten million yuan ($1.6 million) after clients ditched reservations, according to the CCA.

Restaurants in east China's Tianjin municipality and Yinchuan, capital of west China's Ningxia Hui autonomous region, have also taken blows after a slew of official banquets and business meals were called off.

However, restaurants aiming at the low-end market have remained unscathed. Most of them have generated flat revenues, with some even reporting a rise in sales, the survey showed.

The CCA said most restaurant owners are predicting a grim year for 2013. Only 8 percent of respondents, almost all being fast-food restaurants, said they believe that the industry will expand by more than 15 percent this year. About one-third estimated that the growth rate will slip below 10 percent in 2013.

Currently, about 50 percent of restaurant companies are venturing out of their comfort zone and introducing new menus to draw more ordinary diners, while nearly 40 percent are doing market research to adapt to changing tastes, according to the CCA.

The first half of 2013 will mark a key period of adjustment for the restaurant business, the association concluded.