China’s Catering Industry Woes Indicate Low Consumer Confidence in Economy
Udumbara
The Chinese saying, “Food is the first necessity of the people,” is similar to the idiom, “Bread is the staff of life.” The catering industry is one of the most resilient in the world, yet also the most sensitive to economic trends. Generally, catering reacts to economic shifts first, followed by overall retail, and GDP last—though all should trend in the same direction.
According to China’s National Bureau of Statistics (NBS), China’s national retail sales of consumer goods in the first half of 2025 reached 24.54 trillion yuan ($3.42 trillion), which was up 5.0 percent year‑on‑year. Of that, catering accounted for 11.2 percent (2.74 trillion yuan, or about $383 billion), with revenue growth of merely 4.3 percent.
A research report by China Finance 40 (CF40), a prominent state-controlled think tank, shows that the growth of catering revenue weakened significantly in the second quarter. In the first quarter, the average growth rate was 5 percent. In April, it rose slightly to 5.2 percent and to 5.9 percent in May. However, in June, it dropped sharply to 0.9 percent. This decline brought the overall average for the second quarter down to 4.0 percent, making it the primary factor impacting total retail sales growth.
From Pandemic Fallout to Full-Blown Crisis
In 2022, the resurgence of COVID-19 in China and the draconian “zero-COVID” policy—including the lockdown of Shanghai—shook the national economy. That year, catering revenue fell by 6.3 percent. In 2023, at least 1.36 million restaurants folded, vastly exceeding closures in the prior three years. In more detail, 2020 saw more than 320,000 restaurant closures; 2021 saw 935,000; 2022 saw another 519,000. Many globally known bakery brands, such as Lady M, Lenôtre, and LeTAO, closed all their stores in China in 2023.In 2024, the operating environment worsened further, with nearly 3 million restaurant closures—setting a historical record. Numerous eateries across various categories—full-service dining, tea shops, cafes, bakeries, hotpot, buffet, fast food, pubs, barbecue—quietly disappeared from public view.
Catering Industry Shrinks Further
By 2025, the restaurant sector’s struggle had given rise to a grim slogan: “Just surviving is success.” According to NBS data, in June, total retail sales increased by 4.8 percent year‑on‑year, while catering revenue grew only by 0.9 percent.Is the Restaurant Industry Still Resilient?
Some argue that China’s restaurant industry remains resilient, pointing to recent years where new business registrations have outpaced closures, pushing the number of catering enterprises to a historic high.But this requires context. China is a massive economy with a naturally huge catering sector. However, in times of economic turbulence and contraction—especially amid mass layoffs in real estate, education, finance, and technology—the middle class has been hit hard and must scramble to survive. Lower-barrier options include driving taxis or ride-sharing, becoming influencers, or opening restaurants.
In 2023, a new business category in the catering industry emerged: “restaurant scavengers.” These individuals buy secondhand equipment—such as refrigerators, ovens, coffee machines, ice-cream makers—from shuttered restaurants. After cleaning and refurbishing, they resell this equipment at low cost, providing startups in the catering field with affordable gear. This also boosted new catering businesses.
