China’s Restaurant Crisis: Over 1 Million Eateries Shut Down Amid Economic Meltdown

China’s ongoing economic downturn has severely impacted the restaurant and tea house industries, leading to an unprecedented crisis. The number of closures is alarmingly high, marking what may be the worst recession these sectors have ever faced.

Traditionally, China’s restaurant and dining industry has been resilient, with a strong cultural emphasis on food. Once established, many restaurants were able to weather economic downturns. However, the current slump in domestic demand has dramatically altered this landscape. Now, merely avoiding bankruptcy is considered a significant achievement.

Recent statistics show the gravity of the situation. Recent reports from sources like Jingji Ribao estimate that over 1.056 million restaurants and tea houses across the country closed in the first half of this year—more than double the total number of closures in 2022. If this trend continues, the number of closures could easily exceed 2 million by the end of the year.

Restaurants and tea houses that remain open also find themselves hanging by a thread. For example, the restaurant industry in Beijing saw profits plummet by 88.8% in the first half of this year compared to last year. Profit margins have shrunk to just 0.37%, making it highly challenging to maintain normal operations. Given these figures, it’s clear that the survival of many businesses is at risk. A closer look at the numbers reveals even more alarming trends: approximately 29,000 noodle shops, popular among everyday consumers, closed in the first half of this year alone—no further explanation is necessary.

Even major restaurant chains are struggling. Ajisen Ramen, a Japanese chain with over 570 locations, reported a net loss of 20 million yuan (about $2.8 million) in the year’s first half. Similarly, Ding Tai Fung, a Taiwanese dim sum chain, is also feeling the pinch, planning to close 14 locations in Beijing, Tianjin, and Qingdao by October 31.

Large franchises are not immune, either. The milk tea brand Nayuki is expected to incur losses ranging from 420 million to 490 million yuan (approximately $58 million to $68 million). The hot pot chain Shabu Shabu anticipates a loss of 260 million yuan (about $36 million). Even Luckin Coffee, China’s largest coffee chain, saw profits drop by 50% despite a 38% increase in revenue in the first half of this year compared to last year.

With no immediate relief in sight, the future looks grim. Chen Lan, who operates a small café in Beijing’s Chaoyang District, expressed her frustration, saying, “It’s tough. It’s incredibly tough.” Her sentiment reflects a broader reality: the heyday of Chinese dining establishments seems unlikely to return anytime soon.