XE Flavor's services and trademarks sold for $48m

An XE Flavor restaurant in Wuhan, Hubei province. The former high-end catering and restaurant company has sold all its XE Flavor catering services and trademarks for 300 million yuan.[Provided to China Daily]

XE Flavor Group Co Ltd, the former high-end catering and restaurant company, has sold all its XE Flavor catering services and trademarks for 300 million yuan ($48.46 million) to Shenzhen Jiajia Catering Service Co, the company said in regulatory a statement.

The company, which is now operating under the name China Science Cloud Technology Group Ltd, shifted its core businesses from catering to Internet services and cloud technology earlier this year.

Of the property sold, 164 of the items are worth 230 million yuan. The move is expected to pay back some of the debts accrued in 2012 when the company issued a series of five-year bonds worth 474 million yuan.

Meng Kai, chairman of China Science Cloud who has been abroad for two months, told reporters that the deal was done "in tears", despite describing the offer from Shenzhen Jiajia Catering as the highest so far.

XE Flavor, a listed catering company, saw revenue fall 41.2 percent to 802 million yuan in 2013 which it blamed on "changes in the operating environment and a sharp drop in consumption", according to its last full set of financials. About 13 restaurants were shut down. Within its last half-year results the company revealed plans to sell four more outlets.

Its third-quarter results showed a further loss of 95.6 million yuan, and it said it was expecting an annual loss of between 180 million yuan and 190 million yuan.

It announced its radical change in direction in July, switching from catering to Internet services and cloud technology, the result of a collaboration with the Institute of Computing Technology at the Chinese Academy of Sciences.

In March, XE acquired 51 percent of Beijing CCTV Splendid Film and TV Corp Ltd for 20 million yuan. It also acquired Hefei Tianyan Green Energy Development Co Ltd in December and made an investment in Jiangsu Shengyi Environmental Technology Co Ltd.

The curbs on luxury spending have resulted in a serious drop in revenue and profits by many high- and medium-end restaurants.

According to a report by the China Cuisine Association report, the catering industry has seen some signs of recovery this year. In the first 10 months of the year, the sector's revenue rose 9.7 percent to 2.26 trillion yuan.

However, Bian Jiang, its deputy director, said it would still take a long time for luxury restaurants to regain their previous market share, given that rising rents and wages continued to seriously affect their situation.