China's Restaurants in Race to the Bottom as Economy Slows

In a dilapidated warehouse on the outskirts of the Chinese capital, businessman An Dawei inspects rows of giant fridges, industrial hobs and commercial bread ovens waiting to be resold to dining establishments.

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BEIJING -

"For the average person, opening a restaurant is almost a guaranteed failure," said the 38-year-old, who sells used kitchen equipment.

Behind every appliance is a tale of a failed Beijing restaurant, set up by those who often bet their life savings on a V-shaped economic recovery after the Covid-19 pandemic, only to see consumers skimp on eating out as China's economy slowed.

That has unleashed a price war in which food providers are offering coffees at 9.9 yuan (S$1.83) and four-person set meals at 99 yuan.

Expanding domestic demand is the top priority in 2025 for China's leaders, looking to offset the impact of US tariffs and a protracted property crisis.

But consumer inflation fell in February at the quickest pace since January 2024, setting off concerns about a deflationary spiral.

In 2024, Mr An and his team dismantled 200 restaurants each month, or 270 per cent more than in the prior year, as the number of dissolved catering companies touched a historic high of almost three million nationwide, data from companies registry Qichacha showed.