Core Viewpoint - The article highlights the increasing difficulties faced by the restaurant industry in first-tier cities in China, indicating a shift from a once favorable entrepreneurial environment to a challenging landscape characterized by high costs, declining consumer spending, and intense competition [3][4][19]. Group 1: Challenges in First-Tier Cities - First-tier cities, once seen as fertile ground for restaurant entrepreneurship, are now described as "hell" for restaurant operators due to escalating pressures and competition [4][5]. - The number of restaurant closures in first-tier cities has surged, with approximately 40,000 restaurants disappearing in the first half of the year [15][19]. - Restaurant revenues in major cities like Beijing and Shanghai have shown a downward trend, with Beijing's restaurant income dropping by 3.7% year-on-year in the first five months of 2025 [17][19]. Group 2: High Operating Costs - The article emphasizes the overwhelming costs associated with running a restaurant in first-tier cities, including exorbitant rent, labor, and marketing expenses [23][29]. - For instance, rental costs for small shops in prime locations in Shanghai can exceed 50,000 yuan per month, with some locations demanding as much as 110,000 yuan [24][28]. - Labor costs are also significantly higher in first-tier cities, with starting salaries for service staff often around 5,000 yuan, plus additional expenses for social security and accommodation [28][29]. Group 3: Changing Consumer Behavior - Consumer spending in first-tier cities is declining, with residents becoming more cautious about their expenditures due to rising living costs [30][34]. - Reports indicate that regular customers are visiting restaurants less frequently, with some reducing their visits from twice a week to once every two weeks [32]. - Population outflow from cities like Beijing and Shanghai, with a combined decrease of nearly 100,000 residents in 2024, further exacerbates the decline in consumer spending [33][34]. Group 4: Market Saturation and Competition - The saturation of the restaurant market in first-tier cities is highlighted, with a significant number of dining establishments competing for a limited customer base [35][36]. - The density of shopping centers in first-tier cities is notably high, with 4.2 centers per million people, far exceeding the international warning line of 2.5 [35]. - This saturation leads to fierce competition, often resulting in price wars that can be detrimental to new entrants in the market [36][38]. Group 5: Adaptation Strategies - Some restaurant operators are exploring new strategies to cope with the challenging environment, such as co-renting spaces to share costs and relocating to less expensive areas [42][44]. - Adjustments in menu offerings and operational efficiencies are also being implemented to reduce costs and improve profitability [44][45]. - Despite the challenges, a segment of restaurant operators remains optimistic and continues to seek innovative ways to thrive in the first-tier city market [41][44].