Attractiveness and challenges of restaurant business in Hong Kong

September 27, 2013 / By

Does this sound familiar to you, “One day you’re in, the next day you’re out!”? Yes, it is the famous quote from supermodel Heidi Klum in the “Project Runway” show. Well, in Hong Kong, this quote also applies to the restaurant scene, with restaurants opening and closing so quickly that sometimes we cannot remember what used to be in its place.

In 2012, the city’s total restaurant receipts amounted to HKD 94 billion. Tourists are increasingly an important customer segment of restaurants in Hong Kong. Over the five years between 2008 and 2012, tourist spending on meals outside hotels as a proportion of total restaurant receipts in Hong Kong increased from 15% to 24%. Locally, Hong Kong people love to dine out; it is somehow rooted in the Chinese belief of “food comes first to humanity”. It also fits the local lifestyle; for many of us, eating out is the only option, given our long working hours. Furthermore, most of our homes are not spacious enough to accommodate gatherings. Hence, we have lots of reasons to dine out. Our herd behaviour is also well-known. Many of us do not mind queuing in front of famous restaurants or making reservations a month ahead, as long as the restaurant has good reviews.

Tourist spending on shopping and meals outside hotels as a proportion of total retail sales and restaurant receipts

Source: Census and Statistics Department, Hong Kong Tourism Board and Jones Lang LaSalle

The diverse mix of customers, convenient local and international transportation for efficient food logistics and excellent connectivity and close links to China all make Hong Kong an ideal place for restaurants to test dining concepts. So far in 2013, demand for restaurant space in the city remains as fierce as ever, both from local and overseas operators. Ichiran Ramen and Dondonya from Japan, School Food from Seoul and Catalunya Spanish Restaurant from Singapore are some of the new restaurants from abroad which are under the spotlight.

On the other hand, the key challenges facing restaurant operators in Hong Kong are the rising rents, high food costs as well as employee compensation in addition to intense competition. It is no longer headline news when a restaurant closes down because of soaring rent. For example, one of my favourite congee shops – Lei Yuen Congee Noodles behind Sogo Department Store in Causeway Bay was forced to close because their rent was doubled earlier this year. Hence, we increasingly see fancy new restaurants opening in less expensive peripheral non-core locations, often with unusual neighbours. Gradually, we see new dining hubs, such as Tai Hang, Kennedy Town and the Star Street/Moon Street area in Wanchai, emerge and become popular.

Meanwhile, other than ensuring food quality and controlling operating costs, most of the performing restaurants in Hong Kong are aggressive in holding events or collaborating with other business partners to offer promotions and to attract media attention. Many of them also add leisure components to the dining experience, such as wine tasting sessions, cooking classes or food photography courses.

I believe the added fun of eating out and restaurant hunting is set to increase along with more newcomers and the on-going musical chair game happening in the city’s dining scene.


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