In Beijing, Nanchengxiang restaurants offer a substantial breakfast buffet, including various rice porridge types, sour and spicy soup, and milk, all for just 3 yuan ($0.40).
Gao Yi, a 71-year-old customer, commented that many affordable options emerged during the pandemic, but not all of them survive. He believes that new good deals continually appear, requiring people to explore to find them.
Deflation is evident in China due to a price competition among lower-end restaurant chains. This trend is driven by weak consumer demand, which analysts warn could adversely impact smaller firms trying to compete with the discounts offered by larger players.
The risk of deflation affecting economic growth, similar to the experience in Japan during the 1990s, looms over the situation.
Ben Cavender, Managing Director at China Market Research Group in Shanghai, emphasized the pressure on businesses to maintain margins while offering attractive deals to draw consumers, especially in the current economic circumstances.
Unlike Western nations, where government assistance was extended to individuals during the pandemic, many people in China had to rely on themselves financially. As a result, there was no immediate consumer spending surge after the restrictions were lifted.
Spending habits have not fully rebounded, and economic confidence remains low, driven by a stagnant economy, unchanged incomes, and uncertainty in employment.
Zhu Danpeng, a food and beverage analyst and deputy head of the Guangdong Provincial Food Safety Promotion Alliance, highlighted how discount strategies align with the current economic situation, offering consumers value-for-money choices.
For instance, the central Nanchengxiang outlet has seen increased traffic since introducing the 3 yuan discount in May. However, the company did not respond to questions regarding profit margins and future plans.
Other restaurants, such as the Beijing-based burger chain Xishaoye and KFC operator Yum China, have also advertised reduced prices on their menus. Although traffic is returning, spending per person has declined, reflecting the lingering impact of the pandemic, which requires people to adjust over time.
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