Michelin-starred Taiwanese dim sum restaurant Din Tai Fung said it is closing more than a dozen of its restaurants in China as the world's second-largest economy slows.
Plus, as Chinese consumers tighten their belts, they are opting for cheaper food, said the restaurant, known for its long lines and wide variety of hot dim sum.
Din Tai Fung subsidiary Beijing Hengtai Feng Catering Company announced Monday (August 26) that it plans to close all 14 of its restaurants in northern China including one in Xiamen.
The brand's parent company in Taipei told VOA that its 18 remaining restaurants in eastern China, run by another Shanghai-based partner, will continue operating normally.
“We sincerely apologize for the inconvenience and disappointment this decision has caused to our many loyal Din Tai Fung customers,” the subsidiary said in a statement on Chinese social media app WeChat.
The company added that severance payments and employee placements would be handled properly.
About 800 employees will be affected by the move, which comes as price competition among restaurants heats up and consumer habits change in China.
Since Beijing began easing strict COVID-19 control measures in late 2022, allowing more people to dine out again, Chinese consumers have become more frugal in their spending, given the economic challenges the country faces, from a property market crisis to an economic downturn, high unemployment and a plunging stock market.
“The current situation in China is that although traffic is still busy, consumption power is weak, including in the restaurant service industry,” said Darson Chiu, an economist and director-general of the Taiwan-based Confederation of Asia-Pacific Chambers of Commerce and Industry.
“High-end brands like Din Tai Fung may not be able to meet consumer demand as they lower their consumption levels in China’s current economic conditions.”
Another factor that poses challenges for companies like Din Tai Fung is the declining trust of foreign companies in the Chinese economy and the decreasing number of foreign tourists to China.
In an interview with the Taiwan News Agency, Central News Agency, Beijing Hengtai General Manager Feng Galvin Yang said foreign consumers account for 20 percent to 30 percent of Din Tai Fung's customers in China, and foreign consumers have yet to recover to pre-pandemic levels.
According to DianPing, an app that connects people with local businesses and restaurants, the average cost of a visit to a Din Tai Fung restaurant in China is around $21.
Most of the chain's competitors in Beijing offer buffets at much more reasonable prices, while fast-food chains serve full meals for just over a dollar.
Despite Din Tai Fung’s conditions in China, the company – which has more than 180 stores worldwide – has found success in the United States, South Korea, the United Kingdom and the United Arab Emirates.
In June and July, Din Tai Fung opened new locations in California and New York. (ft/rs)
