Lower prices on offer as public spending curbs continue to bite

China's middle- and high-end restaurants are facing what industry insiders call a "chilly spring", with many taking measures to combat a drop in business.

Xiang E Qing, a national restaurant chain serving a combination of Cantonese, Hunan and Hubei cuisine, has been promoting a "happy family set menu". Dishes cost from 150 yuan to 300 yuan ($24-48) per head in the private rooms, a considerable drop from the original price.

The Shenzhen-listed eatery has also canceled its lowest-spending limit in private rooms, its service charge and corkage fee.

The restaurant group, which used to concentrate on the middle- and high-end markets, also plans to speed up development of its snack restaurant brand Wei Zhi Du, with dishes costing from 3 yuan to 12 yuan.

Xiang E Qing has also started a group catering business, signing contracts with more than 10 large firms to provide group meals.

Zhi Li Hui Guan, a restaurant featuring Hebei cuisine and mainly serving the North China market, now reserves its first floor for dishes where the average price is about 100 yuan per person. Its fifth floor still serves meals for businesspeople, at 500 yuan a head.

On April 26, Shun Feng, a Cantonese restaurant chain specializing in seafood in Beijing, started a Cantonese food festival, featuring 10 of its most popular dishes along with 20 classic Cantonese foods. It is offering a 12 percent discount during the festival.

South Beauty, Dong Lai Shun and Quan Ju De are organizing group purchasing. South Beauty's Shanghai branch is serving smaller portions, with 60-70 percent of the original quantity, but costing 60-70 percent of the original price.

Many people link the decline of the restaurant business with eight rules China's new leadership issued to improve officials' working style, and recent policies to curb use of public funds.

According to the National Bureau of Statistics, in the first two months of 2013, the industry saw overall income of 403 billion yuan, an increase of 8.4 percent, but the growth was 4.9 percentage points down on the same period last year. It is also the first time for 10 years that growth in January and February has been below 10 percent.