Up until late last year, a popular brunch spot in Shanghai with free-flowing alcohol that was not too expensive was the Bull & Claw.

“It was housed in a beautiful villa-style lane house [with] three floors,” said Rachel Gouk of the Shanghai-based food and drink blog Nomfluence. “That was a lot of overhead to manage just to do brunch, which has an average check of [$50 including] three hours of free-flowing drinks.”

Bull & Claw is part of the Australian firm Camel Hospitality Group, which also ran a handful of gyms and other restaurants serving Italian, Mexican and Thai food. Last November, it shut all its restaurants and bars, and the gyms now operate under a new entity. Camel group sent a WeChat message to all its staff announcing the sudden changes.

“We received a PDF document from our boss Tony Finocchiaro,” graphics designer Joan Dai said. “The document said that the company had dissolved, and every employee’s contract had been terminated. It said our salaries would be ‘prioritized’ as soon as the company’s bankruptcy liquidation was complete. Then the boss disappeared, and he hasn’t answered our calls since. He just ghosted us.”

While catering revenues in China went up by 5.3% last year, profits in cities like Beijing dropped by 81% in 2024 compared to a year earlier. In Shanghai, where catering and accommodation data are combined, profits are estimated to have decreased by a third last year. Many restaurants have closed and sometimes abruptly.

Marketplace tried, without luck, to reach the former bosses of Camel group for comment.

The firm was established in 2010, when times were good.

“They were printing money back in the day,” Gouk said.

In a statement she obtained from the Camel group, the firm wrote it was a “difficult” decision to close all their venues but that “the current challenging market environment have made it unsustainable to continue.”

The firm’s procurement and sourcing manager Cathy Guo was part of the layoffs but still fronted calls from anxious and sometimes angry suppliers who blamed her for not giving them a warning before the closure.

“I had an emotional breakdown and cried for a long time when I picked up those phone calls,” she said. “[Camel boss Tony] should have come up with a proper plan, like negotiating with suppliers to pay them at a discounted rate and pay our workers [what they’re owed].”

Marketplace reached one of the vendors the Camel group owes money to, which was luckily not a large amount.

“It was something like 2000 yuan ($280) that was outstanding. So it wasn’t that much,” said Maria, who manufactures and distributes alcohol to restaurants.

Marketplace is not using her full name because she worries about official retaliation for speaking about the economy in less than glowing terms, which has happened to top economists in the country.

“I think it’s extremely hard to get people to dine out right now,” she said.

That is because of China’s real estate slump. People in China invest most, if not all, their savings in property, which used to be a safe bet until the market dropped.

“[China] overbuilt and there’s a lot of vacant properties,” Maria said. “So, when real estate has started to sort of hit this brick wall, a lot of people have seen their main assets decrease quite a lot, and therefore they’re tightening their purse strings.”

Meanwhile, restaurants have a lot of fixed costs, according to longtime Shanghai resident and Bostonian Scott Minoie.

In 2001, he co-founded the Element Fresh restaurant chain, which was popular for its sandwiches, salads and smoothies.

“[For] 10 to 12 years we were like the rest of China, which is growth. Massive growth,” Minoie said. “What shifted 2012 to 2014 is [that] rents continued to go up. Labor costs doubled and tripled.”

He said companies, which previously did not have to pay social security taxes for out-of-town workers, were suddenly required to do so. Social security taxes in China are “astronomically high” said Minoie — about 40% of payroll.

“The cost started to outpace the revenue growth. We started to see per-restaurant profit level decline because revenue would go up by 5% [and] costs go up by 15%, 20% year-on-year,” he said.

Restaurateur and CEO of True Legend Hospitality group Bryce Jenner once ran seven sports bars and restaurants, a beer brand and a company importing and distributing liquor. Now he is down to just one venue, his Mexican food outlet Pistolera.

He said the first big shift in his business came in 2018, when Chinese leader Xi Jinping got rid of the two-term limit on the presidency, shaking consumer confidence.

“The optimism went,” he said.

Then came the pandemic lockdowns.

Restaurants like the Element Fresh chain officially closed in 2021, though Minoie had already quit the business three years prior.

In 2022, the Shanghai government forced 25 million residents to stay home for over two months. For the remainder of that year, there were layers of restrictions that changed daily.

There was a brief moment of optimism after the pandemic restrictions were fully lifted in 2023. Betting that pent-up consumer demand would drive economic recovery, Jenner re-opened one of his biggest restaurants and bars, the Social House, in the spring of 2023.

“[I thought] there is no way this great country that was so solid [couldn’t] get back on its footing quickly,” he said. “I was quite bullish, and I was very wrong. That sank me.”

He closed the large venue two and a half months later, racking up debt.

“We’re seeing a lot of closures because not only is the economy bad, but we have an oversupply of restaurants,” Gouk said.

Competition comes from other western restaurants and also Chinese restaurants.

“I go around Shanghai, and you can see in Beijing as well, the local Chinese restaurants are better than a lot of the Western restaurants. They really pay attention to decor, to service and social media,” Minoie said.

Following the Camel group closure, a pioneer in food delivery in China, Sherpa’s, aimed at the expat community, quietly shut its app after 23 years. It lost out to platforms Meituan and Alibaba’s Ele.me.

Jenner said he is friends with the Camel group owners and the last time they met was over a year ago to discuss what they should do in the downturn.

“I’d said, ‘Hey, maybe we should fight this together.’ And they [grunted and said] ‘Yeah I don’t know.’ And we all sat there pretty sad,” he said.

In the end, Jenner sold parts of his business and closed others.

However, even downsizing costs money. Unlike in the U.S., companies in China are legally required to pay severance to their workers.

“We don’t have a lot of money in the bank and if we let everybody go, that we should let go so that we can cut down on payroll, well, we’ll be in the red immediately with the severance payment,” Minoie said.

“So, you kind of hang on one more month, two more months, three more months. Eventually you run out of cash. And that’s what happened to [Element Fresh].”

Camel group employees are reeling. 

“I knew the company was on the decline, but I didn’t expect [the boss Tony] would do this unbelievable thing. We had worked together for so many years, but he just disappeared,” Guo said.

In addition to fighting for severance pay and last month’s salary they’re owed, some employees found out the company had missed contributions to their social security insurance.

“During the COVID-19 pandemic, there was a policy to [allow employers to] postpone the social security payments. It lasted for about a year,” Dai said, adding that the Camel group never made up for the payments.

For people like chef Alan Liang who come from a different province, social security also determines access to local services.

“The Camel group stopped making social security payments for over a year for me. So, my child can’t go to public school in Shanghai. It’s stressful,” he said, adding that his child has had to return to his hometown for schooling.

Today, some of the more established restaurants are still packed, but consumption habits have changed.

“People aren’t buying the drinks and they’re not buying the extra appetizers. They’re not buying that bowl of soup. They’re not buying the coffees,” Jenner said.

Items that can increase the tab by 30% to 40% he said.

Until China’s overall economy improves, Jenner said restaurant profits will likely be very thin.

Meanwhile, many restaurants in Shanghai offer discounts on apps.

“It’s a race to the bottom,” Jenner said.

Additional research by Charles Zhang.