China's restaurants face crisis due to deflation

In Beijing, the restaurant industry is struggling as many businesses face closure. Businessman An Dawei sells used kitchen equipment and described opening a restaurant as risky. Many new restaurants opened after COVID-19, hoping for a quick economic rebound. Instead, people are spending less on dining out. This drop in consumer spending has led to fierce price competition. Some restaurants now offer coffee for as low as 9.9 yuan ($1.40) and meals for four at just 99 yuan ($14). Meanwhile, deflation is worrying officials, especially as consumer prices fell sharply in February. Last year, the number of dissolved restaurants reached nearly 3 million, with rates of closure in major cities exceeding 10% each month. An's business saw a significant decline in revenue as smaller shops took over the market, leading to higher competition and lower quality. A bakery franchise near Beijing's Olympic Park shut down after struggling with high rent and low customer traffic. The manager noted that consumers often choose cheaper options, even if the quality is lower. Analysis shows that the average lifespan of a restaurant in China is only about 500 days, much shorter in large cities. Many mid-range restaurants are failing due to high costs and intense pricing wars. This competition has hurt profits and forced many to lower their prices. Despite government plans to address excessive competition, the restaurant industry remains in a difficult position. Experts warn that if restaurants can no longer operate at a loss, they will have to reduce the quality of their ingredients to stay in business, ultimately impacting consumers.