Din Tai Fung, a popular Michelin-starred Taiwanese restaurant known for its long lines and spicy dumplings, is announcing the closure of more than a dozen branches in China as the world’s second-largest economy loses momentum and frugal consumers look for cheaper ways to eat in China.
The company’s subsidiary, Beijing Hengtai Feng Catering Company, announced on Monday that it plans to close all 14 restaurants in northern China, including one in Xiamen. The brand’s parent company in Taipei told VOA that the 18 remaining restaurants in eastern China, operated by another partner based in Shanghai, will maintain normal operations.
“We deeply apologize for any inconvenience and disappointment this decision may cause to our many loyal Din Tai Fung customers,” the subsidiary said in a statement on Chinese social media app WeChat, adding that employee severance and hiring would be handled properly.
This measure will affect around 800 employees and comes at a time when price competition between restaurants is intensifying and consumer habits in China are changing.
Since Beijing began easing its strict Covid-19 containment measures in late 2022 and allowed more people to eat out again, Chinese consumers have been more frugal with their spending amid a range of economic challenges facing the country, from a housing crisis to high unemployment to a stock market collapse.
“The current situation in China is that although there is still traffic, consumption power is weak, including in the catering industry,” said Darson Chiu, a Taiwan-based economist and director general of the Confederation of Asia-Pacific Chambers of Commerce and Industry. “A high-end brand like Din Tai Fung may not be able to meet consumers’ needs because they are limiting their consumption in China’s current economic environment.”
Zhiwu Chen, a finance professor at the University of Hong Kong, told VOA Mandarin in April that he found it unbelievable that some restaurants in Nanjiang were offering meals for a table of 10 for 400 yuan ($56), or 40 yuan per person, instead of the previous 700 yuan.
Another factor that poses challenges for companies like Din Tai Fung is the declining confidence of foreign companies in the Chinese economy, coupled with a decline in the number of foreign tourists in China.
In an interview with Taiwan’s Central News Agency, Galvin Yang, general manager of Beijing Hengtai Feng, said that 20 to 30 percent of Din Tai Fung’s customers in China are foreign consumers and that the number of foreign consumers has still not recovered to pre-pandemic levels.
To adapt to weaker demand, popular hot pot restaurant Haidilao has launched a cheaper hot pot sub-brand called Hailao and started offering personal services such as free hair washing.
According to DianPing, an app that connects people with local shops and restaurants, a visit to a Din Tai Fung restaurant in China costs an average of about $21. Most of the chain’s competitors in Beijing offer far cheaper buffet options, while fast-food chains serve full meals for just over a dollar.
Reactions to the Din Tai Fung closures were mixed in China, with some consumers saying they would miss their “beloved dumplings,” others being indifferent, and still others criticizing the restaurant chain for its poor service.
Despite Din Tai Fung’s difficulties in China, the company – which has 180 stores worldwide – has been successful abroad in the United States, South Korea, the United Kingdom and the United Arab Emirates.
In June and July, Din Tai Fung opened new stores in California and New York.
