Shanghai’s F&B industry feels lockdown pinch

Forays into community group buying have failed to help many of Shanghai’s struggling restaurants.

An empty Nanjing Road pedestrian mall on April 2. Photo from CFP

An empty Nanjing Road pedestrian mall on April 2. Photo from CFP

By LU Yibei, WEI Xianghui


WANG Xiaohai runs the Bu You coffee shop on Changle Road, Shanghai. Since March business has declined. As the only employee, Wang has seen the whole process firsthand. On March 27, Wang’s community was locked down and the whole Puxi area followed suit on April 1, as the city launched a wider scale of COVID-19 screening of some 16 million citizens in a dozen districts.

“All my income comes from this store. A few days ago, a customer ordered a few packets of coffee beans and that was it. I haven’t opened for days, so I have not earned for days.” she said.

Independent operators are particularly vulnerable at this moment. “Many independent coffee shops in Shanghai have been closing and opening and closing again. The business is not stable and the profit not high,” said Wang.

Wine bar Forage opened in June last year and was an instant hit, normally full even on weekdays. On March 12, it was one of the first restaurants in Shanghai to close due to the outbreak. Customers are still willing to wait until the epidemic is over to visit the bar rather than ordering online. “For wine bars, takeaways don’t make much sense. Our main attraction is our atmosphere,” said founder and manager Jill Jiang.

“If the landlord asked me to pay my rent now, I couldn’t afford it,” Jiang said. Labor and rent eat up nearly 40 percent of revenue. Forage is fortunate that the property is owned by a state-owned enterprise. Shanghai will waive some of the rent for small service businesses that lease state-owned property.

Compared with independent stores, chain restaurants are more resilient. “Our store's performance has dropped by about 60 percent. When I saw other brands starting community group buying services, we joined them. Most of the group buying comes from our VIP members,” said the manager of the Changning branch of Blue Frog Bar & Grill.

Wagas also has a community group-buying service in Shanghai and Suzhou. Some communities place up to 40 orders a day, bringing in as much as 20,000 yuan (US$ 3100). The service covered more than 50 communities in Shanghai.

According to a report by Deloitte China and the China Cuisine Association, most F&B businesses have lost 80 percent of their dine-in customers. Since lockdown began in earnest in the Puxi area on April 1, group buying services have been discontinued.