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Shanghai restaurants try to adapt as costs rise


08-18-2014 00:29 BJT

Rents in Shanghai are rising fast, and that's having an impact on restaurants in the city, who say they're being driven out of business. Restaurants are reported to be changing hands - or changing menus - twice as fast as they were 6 years ago. ICS reporter Zhang Jun has been speaking with some restaurant owners, to get a flavor of the state of the industry.

During a brief drive in downtown Jing'an District, we spotted three restaurants undergoing remodeling and plenty of newly decorated eateries along Fumin Road and Julu Road. The owner of this bistro says it was just an ice-cream shop for more than 4 years, but that couldn't bring in enough money to cover his rising costs. So he remodeled, and now sells sandwiches and pasts.

"Rent here in Shanghai is becoming really, really expensive. So it's like to cover the rent, you always need to find something more unique and more particular to sell for the customer. So try to give your customers a reason why they come back to your place and they don't go to other place," said Steven Venturini, the Italian Bisto Owner. 

A short walk down the street from the Italian Bistro, sits a former Chinese noodle restaurant that just underwent a major change. After 50 days of remodeling, it now sells Thai food.

"The original noodle restaurant didn't run well and couldn't make ends meet. So our company has decided to change it into a Thai Food restaurant because so far there are no Thai food restaurants in this building," said Cao Hongchun, a Property Manager.

Not far away we found western restaurant amid a number of small Chinese restaurants. The restaurant had closed down at a different location two years ago, but reopened this spring. He says rising costs are a serious challenge to everyone in the industry.

"I can recall that when our restaurant opened its doors years ago, it only paid a salary of 800 to 1,200 yuan to each staff member. But now we have to pay some 3,000, not including the cost of the staff's accommodations and daily meals," said Steven Huang, a bar and restaurant owner.

Some foreigners we talked to said too much remodeling can be a problem. 

"Well, I think in the Europe or the western countries, the long-lasting ones, if you like, you have a customer loyalty and you come over again and over again. But if it's changing so often then, you cannot make customer connection with it, like loyalty will change because after a couple of years, it will disappear anyway," said Leo Aslany, a Dutch expat.

"I think everybody should think about the quality of the food they serve and a lot of time, spend money, I'd rather pay some extra to get good quality than pay less to get," said Oddvar Haugland, a Norwegian expat.

The expat magazine That's Shanghai held its annual award party for the city's best food and beverage outlets, and its editors say at least 8 new restaurants open every month, twice as many as in 2008.

"It's a tough market so you got to be good to survive. So it's like you say there is a lot of turnover a lot of new places opening, a lot of places reinvent themselves. I think you need to be very good and keep yourself fresh to survive because the competition is so great, you know," said Ned Kelly, Editorial Director of That's Shanghai.

Besides the rent and hot competition, some restaurants are pushed to new locations to make way for urban development.

At this old building in Jing'an District, you can still see some signs for restaurants that had to move out two years ago when the government announced plans to redevelop the area. That hasn't happened yet, but urban renewal is one reason why many longtime food and drink establishments are ending up in other locations.

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