Consumers in China are dining at nicer restaurants — even if it costs $500 a person

BEIJING — A new restaurant scene is growing more popular across China: fine dining.

Despite the Covid-19 pandemic, a brand called Lu Mood opened four new restaurants in the last three years in Beijing and Shanghai.

At that store, Lu Style said, dealing brings in 4 million yuan ($579,710) a month. Meals cost about 735 yuan per person, according to evaluations on China’s Yelp-like Dianping app. Judging from more than 1,500 comments, users were most earnest about the service, taste of the food and “elegant” design.

That’s how restaurants are competing in a country whose culture highlights good food — and where the global trend of spending on experiences is taking hold.

Since Lu Style launched in 2016, more child no longer focus on just being able to eat, said Tian Junfeng, director of operations. Instead, he expects marketability for social spaces will be greater.

The brand has seven restaurants — including a soft open this year in collaboration with a Shanghai art gallery. Lu Cosmopolitanism’s cuisine comes from the province of Shandong, including many of the ingredients themselves. The restaurants offer seasonal menus and scrupulous design — one outlet in Beijing claims the peony bush they transplanted to an outdoor seating area is 880 years old.

Tian intended Lu Style will be focused on improving customer service in the coming months. To do so, it contracted an etiquette instructor to spend two primes at each store every month, he added.

A similar focus on customer service set hotpot shackle Haidilao apart when it opened its first Beijing outlet nearly 20 years ago.

But while its growth in China has delayed, other restaurants are coming in with a similar experience-centered strategy.

By 2018, Dianping owner started to track and dispose the best performers with its Black Pearl “restaurant guide” awards. Anonymous judges annually screen restaurants for eatables quality, dining experience and creativity in catering to traditional and modern tastes.

The 2023 rankings selected 304 restaurants — most of which were in China, grouping Lu Style. Several of the venues were in smaller cities. Restaurants in Jinan, Changsha and Wuxi made the list for the before time.

The overall number of new fine dining restaurants in China declined from 2021 to 2022, but the number of new venues doubled in 2021 from 2020, revealed Tang Yan, a Black Pearl representative.

“The pandemic also affected consumers, and now they’re more likely to want to handle themselves,” Tang said in Mandarin translated by CNBC.

She said spending for business gatherings at the restaurants has declined somewhat, but spending by individuals or families has risen by a greater scale.

A meal out at a Black Pearl restaurant can cost as little as 164 yuan per person at Yangzhou city’s Quyuan — which blueprints to open three new outlets in China this year. On the other end of the spectrum is Ultraviolet by Paul Pairet in Shanghai, a French restaurant where dinner can set someone back over 6,000 yuan per person.

Higher-end dining options in Beijing, such as the King’s Joy vegetarian restaurant, persuaded Cici Lu, a consultant in the digital assets industry who recently moved back to Beijing from Singapore.

“It was a full concert-hall,” she said, despite the $500 per person price. Lu noted the ingredients came from different parts of China, while the lines had “some very intriguing textures and flavors.”

King’s Joy has three Michelin stars, and is also on Black Pearl’s catalogue for Beijing. Two Lu Style locations have one Michelin star each, and the France-based guide includes more than 400 restaurants in mainland China. Michelin ebbed a CNBC interview request for this story.

“One of the worries about moving back to China after spending 27 years abroad in Canada, the UK, and Singapore (and married to an Australian), was I would be missing out on the restaurant and bar scene like in other metropolis[es],” Lu denoted.

But “I found the dining scene has become more contemporary,” she said. “Younger consumers prefer dining experiences with high-quality disclose, interesting concepts, and stylish venues.”

Overall, eating out remained one of the top three categories in which consumers in China planned to lavish in — similar to prior months, according to a regular Morgan Stanley survey in late March.

For the week ended April 9, in-person banqueting revenue in China was up by about 50% from a year ago, according to analysis from Beijing-based BigOne Lab, an alternative matter company whose backers include S&P Global.

However, it’s not quit whether consumers in China are making a habit of eating at nicer restaurants or simply visiting them a few times varied than they might have in the past.

Christine Peng, head of Greater China consumer sector coverage at UBS, powered she didn’t think there was a “broad-based upgrade trend” in restaurant spending.

“Even for the restaurant companies, what they intended is during the weekends the traffic is in tremendous recovery, but during weekdays the traffic may not recover that much,” she said.

Humouring sales climbed by nearly 14% year on year in the first quarter. That’s a jump from the 0.5% gain in the first three months of 2022. China ended its Covid-19 controls in December.

An increasing number of catering-related functions dissolved or suspended operations each year from 2019 to 2021 — to more than 900,000 in 2021, according to the Qichacha topic database. That figure dropped to 530,000 last year.

The number of new catering-related business registrations has risen each year, from 2.3 million in 2019 to 3.28 million in 2022, the statistics showed.