Starving in luxury

When Zhang Qing (pseudonym) noticed that the Taiheshun restaurant near his home in Xicheng district, Beijing, had added a sign earlier this year saying "affordable for most," he was flabbergasted.

The restaurant had always cultivated a rarefied, luxury atmosphere that made it seem out of reach of ordinary consumers.

"This was a fancy restaurant that had dozens of fancy cars from the army parked in its yard every weekend. Dishes in there are luxurious, with the average cost per person reaching at least 700 yuan ($114)," Zhang told the Global Times Monday, adding that middle-class people wouldn't visit unless it was entirely transformed.

This is exactly what the Taiheshun restaurant is trying to do and it's not alone. High-end restaurants across China are scrambling to fill revenue shortfalls after a government crackdown on officials' consumption of luxury items.

Since a government campaign, which aims to limit the consumption of luxury goods via bans on certain products, was launched at the end of 2012, luxury banquets have dwindled and so too have the restaurants who supply them.

"These bans are disastrous, causing severe reductions in income for these restaurants, leading to a wave of transformations," Bian Jiang, the deputy chief of the Chinese Cuisine Association, told the Global Times Friday, adding that this is the most chilling winter the Chinese luxury catering industry has ever experienced.

Out of the frying pan

Those hit hard by the new policies include one of Beijing's most famous draw cards. Quanjude restaurants - among the most famous purveyors of the famous Beijing roast duck - have suffered along with other Beijing restaurant icons like Xiang'eqing.

Many of these outlets have decided to dramatically lower dish prices, sometimes by up to 60 percent. However, slashing prices is proving a bitter pill for many luxury restaurants to swallow.

According to a public financial report released by the Beijing-based Xiang'eqing Group on July 12, despite taking measures like removing certain expensive items from menus, many of its restaurants are still in the red or have closed down and the group has lost 80 to 110 million yuan.

A number of factors have conspired to hamper the ability of these restaurants to adapt.

Compared with popular restaurants, the luxury ones, which mainly target government customers, are usually located in less noticeable places and avoid being high-profile. They also often provide many small dining rooms for individual groups rather than large areas. All of these factors make them more susceptible when their target market shrinks.

The pain of this transformation has already been passed further up the industry chain. In Beijing, many seafood dealers are feeling the effects as orders for certain expensive products decline in line with the closures of the restaurants selling them.