We show direct evidence of the distortionary effects of rent-seeking activities, by studying the impact on Beijing’s restaurant sector of China’s 2012 anti-corruption campaign, which placed strict limits on lavish spending by public officials. We find that restaurants located closer to government offices experienced a relative decline in consumer demand. We further show that the spatial distribution of establishments became less concentrated around government offices, compared to before the campaign. Our results underscore the influence of rent-seeking activities on the prior spatial distribution of the restaurant sector, suggesting that they distort economic outcomes beyond industries targeted by the rent-seeking itself.