Menu: Home-style dishes to attract diners

The situation is much worse for restaurants with an annual turnover of more than 2 million yuan. For them, it is not a question of lower growth, but a drop of 3.3 percent in business in January and February compared with last year.

A survey by the Ministry of Commerce found high-end restaurants in Beijing have seen a 35 percent fall in business, while those in Shanghai have reported a drop of 20 percent, after the government policies were announced.

Bian Jiang, assistant director of the China Cuisine Association, said the major causes of the decline are soaring rents, the rising cost of ingredients and labor, and increasing taxation.

The association submitted a proposal during this year's top legislative meetings to lower taxation for restaurant businesses.

Middle- and high-end restaurants that don't depend so heavily on customers who pay with public funds have not suffered as much.

Zhang Jun, general manager of Xi He Ya Yuan Peking Roast Duck Restaurant, said his business has not been affected as much, because it depends on businesspeople and visitors to shopping malls. Most of his restaurants are in large malls.

He said spending with public funds pushed the cost of meals at restaurants to ridiculously high levels. "A meal could cost 10,000 yuan, with 7,000 spent on liquor," he said. "It just ruined the normal market."

With the newly introduced curbs, he expects high prices to fall soon, including the price of expensive Chinese liquor and seafood.

"We will increase the number of home-style foods that are more familiar and affordable to the common customer," he said. "Most restaurants will become more affordable, therefore we hope people who used to visit lower-priced restaurants will be attracted to us."

Meanwhile, Bian said the situation in high-end restaurants can be viewed as pressure and also as a motive for change.

"In the past, the restaurant business rose so fast nobody paid attention," he said. "But now, market rules will force restaurants to improve food and service quality."