Recovery on the menu for some restaurants in China

Shenzhen, China – For weeks, Wang Yang had been using an old electric bicycle that has seen better days to deliver food from her family restaurant – specialising in Northeast Chinese cuisine with items such as dumplings, smoked roast tofu strips, roast chicken, and a sauerkraut and pork rice noodle dish – around her neighbourhood.

In normal times Wang would have been behind the counter at her restaurant or bringing these and many other dishes to the often-packed five tables in her small, family-run restaurant in Shenzhen, the megacity of about 20 million people just north of Hong Kong.

But these are not normal times. The coronavirus outbreak in China kept her restaurant, and an untold number of others across the country, closed for dine-in customers since the Lunar New Year in late January and subsequent lockdowns to prevent the COVID-19 coronavirus from spreading more widely.

“We are open for dine-in customers now,” Wang said following weeks of uncertainty. “It is slow, but at least we are open.”

Currently, dine-in restaurants are not allowed to open in any area in China that has not been declared by authorities a “low-risk” zone for virus transmission.

And while more restaurants are slowly reopening as restrictions ease, getting customers to return in their usual numbers will prove difficult until the crisis is fully over.

According to the China Hotel Association Research Institute, 60 percent of chain and franchise restaurants are fully operating, but overall rates for all restaurants were hovering around 30 percent in mid-March, according to a March 13 report from state-run Xinhua news agency.

Bankruptcy risk

Those forced closures are putting many small and medium-sized restaurants that are not supported by massive national or international corporate chains at risk of bankruptcy, particularly if restrictions progress further into March or longer.

S&P Global China forecast a “significant decrease in sales revenue” for restaurants in China for January and February in a report released on February 19, estimating that sales revenue for the entire first quarter could be up to 55 percent lower than the same period last year.

Some localities in provinces like Anhui, Jiangxi and Jiangsu have gone as far as ordering officials to eat out and pay for at least 100 yuan worth of food in an attempt to give people the confidence to eat out again.

One of the restaurants teetering on bankruptcy is a 28-year-old noodle restaurant not far from Wang’s, with a once-steady flow from a loyal customer base.

“We just reopened a couple of days ago,” Ms Su, in her 50s, who co-owns the operation with her husband, told Al Jazeera, on the condition that her full name and that of her restaurant not be used. “There aren’t as many customers as before but at least we can open for business now, and that is a relief, because now that we can make money again, our financial situation will slowly get back to normal.”

Once given approval for opening dine-in services, restaurants have to go through complicated health procedures such as issuing masks to employees every four hours, conducting frequent temperature checks, ensuring safe distances between tables, and for clearing all customers from restaurants every two hours for full disinfection at some locations.

Those conditions are proving onerous for many stand-alone restaurants.

“That really only works in a fast-food environment where there is a quick turnover of guests,” said Sally Spika, who co-owns and operates the still-closed Uberfood, a smaller high-end Western restaurant in the city of Wuxi, Jiangsu province, which she has run with her husband Ralf, a Michelin-starred chef, since 2007.

“The situation we’re in now is basically we think we’re bankrupt,” Spika told Al Jazeera. “Life will just not get back to normal for us and unless we can find a solution, the business is finished.”

While Spika said some restaurants have begun to open in other parts of Wuxi, she was not hopeful that customers would return in the numbers needed right away.

“I think it’s going to take a while for people to start relaxing,” Spika said. “You can’t tell people, be afraid, wear a mask, don’t talk to people, don’t socialise, for six weeks of complete paranoia and then just wave a wand and say everything’s fine now, strip off to a T-shirt and start hugging your friends again.”

Economic pressure

The failure of restaurants like these could drive up unemployment and add to the country’s economic pain.

China’s official unemployment figures rose to 6.2 percent in February, up from 5.3 percent a year before, National Bureau of Statistics data released on March 16 show. The figures, however, do not take into account the full extent of job losses for the 300 million or so migrant workers, many of whom are not on official contracts or only work on informal labour contracts, particularly at small and medium-sized restaurants across the country.

According to a statement from the China National Bureau of Statistics released in January, the catering industry generated 1.8 trillion yuan in 2019, accounting for 6.3 percent of the economy.

While some restaurants may be better prepared to hold out, each day of delay adds significant pressure.

“We had been closed for over two months now and still don’t know when we can fully resume all of our business,” Ms Chen, who also did not want her full name used, told Al Jazeera.

“We’ve been allowed to reopen one outlet and things are more normal now there, with dine-in available. But we can only allow a few groups at a time.”

Chen, 44, who specialises in snacks and Cantonese dim sum (steamed or fried dumplings and other small finger food), has two outlets and employs a total of 20 people, some whose jobs are in limbo as much as her own operations.

By the end of 2019, more than 26 million people were employed by the hotel and catering industry, according to data from the State Council, with approximately 60 percent of that number, or 15.5 million, from the catering side, Jacky Wong of consultancy firm Deloitte China told Al Jazeera.

The estimated number of people working in smaller “household” businesses including small restaurants, bars and cafes that do not make it into the official statistics, is closer to around 200 million, according to government data.

“Both chain restaurants and private non-franchised restaurants are exposed to risks,” said Deloitte’s Wong.

But he added that he has not seen many bankruptcies reported and he believes the catering industry is proving to be flexible by tapping into the online, delivery and takeaway businesses.

Even with those options, some, such as dim sum specialist Chen, are finding it hard to make ends meet.

“We still need to pay our employees and our rent,” Chen said. “Right now their monthly salaries [for those not working yet] have been reduced to 80 percent but we’re still paying full rent.”

For foreign restaurant operators like Spika and Rob – owner of a pizza restaurant that opened in Chengdu, Sichuan, in December just before the outbreak – another huge hurdle is sourcing foreign ingredients through disrupted international supply chains.

Spika’s biggest problem is finding quality meats, fresh and sustainably sourced fish, and organic produce.

For Rob, a 39-year-old United States citizen who did not want his full name used since he thought it may affect his reopening, that means flour, bacon, pepperoni and cheese.

“Just to get supplies is a nightmare,” Rob told Al Jazeera.

Additional research and reporting assistance provided by Zhong Yunfan.