Chinese restaurant chains raise prices to offset coronavius-caused loss

By Qi Xijia Source:Global Times Published: 2020/4/8 17:43:40

A inside view of a Haidilao chain restaurant in Shanghai on Thursday Chen Xia/GT



Many Chinese restaurants allegedly have raised their prices following the resumption of dine-in services, in an attempt to offset rising food costs and economic losses from forced closures due to the coronavirus pandemic.

Industry insiders pointed out that more eatery chains are expected to increase prices to help alleviate their difficulty. However, the tactic may only work for leading companies with strong customer bases and pricing power. Small and medium-sized enterprises are more likely to attract customers through other promotional activities.

In response to customer complaints, a well-known hotpot chain Haidilao, confirmed to media on Sunday that it had increased prices.

Some netizens have posted on Twitter-like Sina Weibo that the prices of dishes were being raised and portion size had dropped following the chain's reopening.

"It 's 13 yuan ($2) for a half potion of potato slices, 1.5 yuan for each slice; 7 yuan for a bowl of rice; 50 yuan for a plate of small crispy meat. It's too expensive," commented a Beijing-based Weibo user.

A customer service representative from Haidilao told the Global Times the company had adjusted the prices of some dishes. Overall, prices have increased by 6 percent due to rising food costs, and a restriction on numbers of customers to prevent virus infection.

Other leading catering brands were reported to have followed suit, with one internet user commenting that the price of potato and beef strips from Xibei Youmiancun, another food chain specializing in delicacies from Northwest China, has skyrocketed to 80 yuan. 

In response, Xibei told the Global Times that it had not increased its prices during the pandemic. 

"We did not raise our prices but have been working hard to ensure our food safety and hygiene standards, which have been our priority over the past two months," Yu Xin, director of public relations for the company, told the Global Times on Wednesday.

More leading companies are expected to follow, Zhu Danpeng, a food industry analyst, told the Global times on Wednesday.  

"After the pandemic the catering industry may be split into two groups. Big companies may increase prices to their advantage amid pandemic precautions and strong fan bases, while middle and small-sized companies may not dare not to increase prices. It all depends on the scale of a company and its fan base," he said.

On the consumer side, opinions on the price hikes vary.

Xiao Song from Shanghai told The Global Times that he will still go to Haidilao despite its increased prices.

"I visit Haidilao infrequently for gatherings so I don't mind paying 50 yuan more for their service," he said.

Zhu believes increasing prices will not affect the consumption behavior of middle and high-end customers, which leading catering companies target. However, price hiking should not be encouraged.

"Given that the profits of catering industries can reach 70 percent, leading companies should make joint efforts to tide over the difficult period to boost consumption rather than transferring costs to the customers in pursuit of profits," he added.

In the first two months of 2020, the catering industry recorded revenues of 419.4 billion yuan, a year-on-year decrease of 43.1 percent, according to the National Bureau of Statistics.

Posted in: INDUSTRIES,MARKETS

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