China’s catering industry is expected to record a solid gain during the golden week holiday, underpinning a recovery in consumption that has powered the rally in shares of restaurant operators like Haidilao and Jiumaojiu.
Bookings, especially for private dining rooms, at many restaurants were full or almost full for the eight days to October 8, according to local media reports. Some of Haidilao International’s hotpot outlets have been fully reserved, it said.
The National Day holiday, when millions of residents are expected to throng local tourist spots, cinemas and shopping malls, and the momentum that comes with it, could help push the catering industry receipts closer to 2019’s before the year is out, an analyst said. China has stepped up efforts to further reopen the local economy after getting the country’s Covid-19 outbreak under control.
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“Private room bookings were full at Haidilao’s Beijing Wangfujing branch, only a small number of seats in limited time slots are available in the common dining area,” a company official said in an email to the Post on September 29.
Catering receipts recovered 93 per cent in August to 362 billion yuan (US$53.1 billion), according to government data. Declines in those receipts have narrowed from year-ago levels since April, as economic recovery momentum helped shore up confidence in spending.
China’s economy rebounded 3.2 per cent in the June quarter, putting it on course for a full-year expansion. The historic slump around the Lunar New Year in February caused 500 billion yuan of lost sales, when about eight in 10 restaurants reported no business in traditionally the most lucrative period of the year for restaurant operators, according to the China Cuisine Association.
“Catering revenue is likely to record monthly positive growth within this year,” said Alfred Chen, consumer analyst at Guotai Junan Securities in Shenzhen. “The industry will benefit from gradual loosening of the virus control measures, which encourages people to leave their homes and eat out.”
This has given listed restaurant chain operators a shot in the arm. Despite earlier wobbles, Haidilao has risen 79 per cent this year to September 30, while Jiumaojiu International has surged 176 per cent. An index tracking Chinese catering stocks rose 14 per cent over the same period, according to Wind Information.
“In the post Covid-19 era, concentration in the market will be elevated considerably,” said Chen of Guotai Junan. “It will be a decent opportunity for large-scale restaurant chains to occupy market shares.”
The Ministry of Culture and Tourism in mid-September allowed local tourist attractions to increase their admission capacity to 75 per cent of their usual capacities, up from the 50 per cent and 30 per cent previously allowed in phases.
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Some gauges also indicated that domestic travel during the golden week holiday – the longest uninterrupted break since the viral outbreak – is about to surge. Air travel is expected to reach a record high, while an estimated 600 million tourist trips.
The gains build on from local government incentives in recent months, including coupons worth millions of yuan to boost local consumption.
“People’s willingness to go out and travel is very strong, which will support further recovery in the catering industry,” said Fu Yifu, a senior researcher at the Suning Institute of Finance. “When people travel, they have all meals outside, so the restaurant revenue will increase significantly.”
More from South China Morning Post:
- Golden week: record number of Chinese travellers planning domestic trips tempted by cheap airline fares, overseas curbs
- China’s post-Covid-19 travel industry sees green shoots with tourists embracing short trips, luxury stays in lessons for global operators
- Covid-19 polarises China’s consumers as luxury sales boom while the lower income group turns to cheaper alternatives
- Haidilao hotpot queen opens Singapore family office to manage US$7.7 billion fortune
- Starbucks and hotpot chain Haidilao close mainland China stores in response to Wuhan coronavirus outbreak