(Yicai) July 21 -- Several Chinese restaurant chains shut outlets and lowered their prices in the first half to survive shifting consumer trends and price wars among food delivery platforms.

Lalengmen Clear Oil Hot Pot closed six stores in the six months ended June 30 because of falling demand, bringing its total down to just over 30, founder Zhu Guo told Yicai. “Previously diners picked the tastiest dishes first, then looked at price,” he said. “Now the primary criterion is price, and only afterwards do they consider quality.”

Din Tai Fung, which specializes in xiaolongbao soup dumplings, closed its last restaurant in Ningbo in May, completing its exit from that city. 

Well‑known casual dining chains are also cutting outlet counts. Burger King China said last month that it would close underperforming outlets this year, offset by some new openings, but expects its year‑end store count to fall short of last year’s.

Other restaurant chains have instead moved to smaller premises from prime spots in shopping malls to cuts their rent burden.

Lower demand has already affected the financial performance of some listed caterers. For example, the well-known Beijing roast duck chain Quanjude expects a net profit of CNY11 million to CNY14 million (USD1.5 million to USD2 million) for the six months ended June 30, down from CNY29.3 million a year earlier.

The catering sector showed signs of slower revenue growth, shrinking profits, and intensified competition in the first half, and is facing severe challenges, according to a recent report by the China Cuisine Association.

In an intensely competitive market, firms need to plan more carefully based on the characteristics of their own businesses so that they can still attract enough customers while trying to reduce costs, Huang Zhongbin, senior associate director at Savills' commercial and retail services department, told Yicai.

Despite demand shrinking overall, Zhu noted some positives, such as focusing on fresh ingredients, which can be quite popular.

"Some of my friends in the barbecue business have chosen to highlight the freshness of their ingredients as a selling point, converting their kitchens into display areas where they slice fresh beef and kill fish in front of diners," Zhu said. "They are doing fairly well."

He also said that some of them have even started to venture into mountainous areas to source high-quality, traceable, fresh ingredients.

Zhu believes the industry’s lifeline hinges on elevating ingredient quality to create genuine differentiation rather than depending on basic price cuts.

Editors: Tang Shihua, Futura Costaglione