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Beijing eateries cash in on low rents

By Lu Haoting (China Daily)
Updated: 2009-01-22 07:58

The financial crisis may spell some good news to restaurateurs in Beijing as restaurant rents are falling due to the sluggish real estate market.

Related readings:  China's realty prices dip further in December  Realty firms change tack to beat crisis

Commercial space rental fees in Beijing are expected to dive further this year due to excessive supply, according to a recent report from CB Richard Ellis, a US commercial real estate services firm.

The report said about 2.13 million square meters of commercial space will enter the Beijing market this year, twice the amount of 2008.

"Real estate companies are facing greater pressure to attract businesses. That will give us more bargaining power," said Fu Guojun, director of sales and marketing of Beijing Huajia Yiyuan Restaurant Co Ltd.

Huajia Yiyuan is famous for its old siheyuan (courtyard) restaurant near Dongzhimen. The 10-year-old restaurant chain also owns four other restaurants in eastern Beijing.

"We plan to spread to western Beijing in 2009. The falling rents are definitely good news to us," Fu said.

The restaurant has already blown the first victory horn as it negotiates rents for its outlet in SOHO Shangdu, a commercial building complex in the CBD (Central Business District).

Huajia Yiyuan is not alone.

South Beauty Group, an upscale catering chain operating 31 restaurants around China, recently cut its menu prices by 20-30 percent. For example, the price for Mizhihuofang (braised ham in honey sauce) has been cut from 88 yuan to 58 yuan.

Zhang Lan, chairwoman of the restaurant chain, said the falling rental rates and raw material prices made the price cuts possible.

Rents usually account for one third of total investment of a new restaurant. Beijing Bianyifang Roast Duck Group Co Ltd is looking for locations for three new restaurants.