Sudden closure of Chinese restaurant chain Shanghai Min’s outlets leaves diners in limbo
Operator Shanghai XNG Holdings suspends operations at 10 branches on the mainland, saying the closures are part of a strategic realignment
Customers who had booked Lunar New Year’s Eve dinners at Shanghai Min, a formal Shanghainese cuisine restaurant chain, were left in limbo after several of its mainland outlets closed, leaving many still waiting for refunds.
“Consumers have grown increasingly rational in their dining spending, and the demand for high-end business banquets has been shrinking,” said Fu Yifu, a special researcher at Su Merchants Bank in Nanjing. “As Shanghai Min has long been dependent on a high-end business-oriented model, the drop in average spending per customer has significantly squeezed its profit margin.”
Fu added that competition in China’s formal dining sector had intensified and become highly fragmented. “Local Shanghai-style restaurants and fusion cuisine brands have diverted customers, while their slow menu innovation and outdated decor made it harder to attract young consumers.”
He added that Shanghai Min had made strategic mistakes. Following its Hong Kong listing in 2012, aggressive multibrand expansion stretched its resources, while rising costs for ingredients, rent and labour worsened its financial condition.