Impact of COVID 19 on Finance and Operations in the Chinese Catering Industry

Since the outbreak of COVID-19, Chinese catering companies have suffered a massive direct impact. The majority of catering companies (particularly SMEs) have faced sharp declines in customer numbers, ruptured asset chains, or other momentous challenges.

The China Cuisine Association and Deloitte China surveyed the Impact of COVID-19 on Finance and Operations in the Chinese Catering Industry from mid-February to early March this year to better grasp the difficulties and challenges in catering businesses’ operations and finance, and to derive a suite of proactive, effective countermeasures Deloitte is able to provide. The findings promise more precise assistance for enterprises at this difficult time and provide strong evidence for greater policy support.

Crises, although dangerous, are often said to represent new opportunities. The COVID-19 pandemic has dealt an unavoidable blow to the catering industry, but many companies can navigate this “baptism of fire” with the right countermeasures to strengthen their immunity, financial and operational management systems, develop a sharper competitive edge and be better positioned for the consumption rebound to come.
 

Survey findings

Our findings from gathering and organizing information on companies’ circumstances, the outbreak’s impact, companies’ counter-strategies and developmental needs include:

1. 94% of catering enterprises’ dine-in services have been affected, including a more than 80% decline in dine-in customer numbers for 69% of companies

2. 65% of respondents have strengthened cash flow oversight in response to the pandemic. The main areas of pressure now include:

• Wage costs
• Cash clawbacks
• Rent

3. More than 80% of businesses expect to need additional financing in the next six months

4. About 80% of respondents have downgraded their performance outlooks, over half by more than 50% from their original 2020 forecasts

5. Survey respondents are most hopeful of receiving three major supports:

• A reduction or delay in tax payments
• A reduction or delay in “five insurance and housing fund” payments
• Post-outbreak rent reductions or relief