Din Tai Fung, a popular Michelin-starred Taiwanese restaurant known for its long lines and hot dumplings, says it is closing more than a dozen stores in China as the world’s second-largest economy loses steam and thrifty consumers seek out cheaper options for dining out.
The company’s subsidiary, Beijing Hengtai Feng Catering Company, announced Monday that it plans to close all its 14 restaurants in northern China including one in Xiamen. The brand's parent company in Taipei told VOA that its 18 remaining restaurants across Eastern China, run by another Shanghai-based partner, will remain in normal operation.
“We deeply apologize for the inconvenience and disappointment this decision may cause to our many loyal Din Tai Fung customers,” the subsidiary said in a statement on the Chinese social media app WeChat. It added that employees’ severance and placement would be handled properly.
Some 800 employees will be impacted by the move, which comes as price competition between restaurants heats up and consumer habits shift in China.
Since Beijing began loosening its strict COVID-19 control policies in late 2022, allowing more people to eat out again, Chinese consumers have been more frugal in their spending, given a range of economic challenges the country is going through from a property market crisis to high unemployment and a slumping stock market.
“The current situation in China is that while there is still traffic, the consumption power is weak, including in the restaurant service 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 the consumers' needs as they downgrade their consumption in China's current economic environment.”
Zhiwu Chen, a professor of finance at the University of Hong Kong, told VOA Mandarin in April that he found it unbelievable that some restaurants in Nanjiang were offering food for a table of 10 for 400 yuan ($56), or 40 yuan per head, down from its previous price range of 700 yuan.
Another factor posing challenges to companies like Din Tai Fung has been foreign companies’ decreasing confidence in China’s economy coupled with a drop in foreign tourists to China.
In an interview with Taiwan’s Central News Agency, Beijing Hengtai Feng’s General Manager Galvin Yang said foreign consumers accounted for 20% to 30% of Din Tai Fung’s customers in China, and foreign consumers have still not recovered to pre-pandemic levels.
To adjust to weakening demand, Haidilao, a popular hot pot restaurant, has introduced a more affordable sub-brand hot pot called Hailao and begun offering personal services such as free hair washing.
According to DianPing, an app that connects people to local businesses and restaurants, the cost of a visit to a Din Tai Fung restaurant in China averages roughly $21. Most of the chain’s competitors in Beijing offer far more reasonable buffet deals, while fast-food chains serve full meals for just over a dollar.
Reactions to Din Tai Fung’s closings have been mixed in China. Some consumers say they will miss their “beloved dumplings,” while others were indifferent, and some criticized the restaurant chain for poor service.
Despite Din Tai Fung’s struggles in China, the company — which has more than 180 stores globally — has found success abroad in the United States, South Korea, the United Kingdom and the United Arab Emirate.
In June and July, Din Tai Fung opened new branches in California and New York.
