The food and beverage (F&B) industry in Hong Kong has undergone significant changes due to the pandemic. With the borders reopened and restrictions eased, what are the emerging trends and opportunities for operators?

As socialising and eating out are integral parts of local culture, lifting social restrictions is a welcome change for many Hong Kong residents. Despite the challenges of the pandemic, the F&B industry has continued to grow, with the number of licenced restaurants increasing. In fact, the growth rate in the first two months of 2023 was 2.3% (Figure 1), which is on par with the full-year growth rate in 2019, indicating a strong rebound.

Figure 1: Licenced restaurants in Hong Kong

Note: * indicates year-to-date growth
Source: Food and Environmental Hygiene Department

Meanwhile, landlords have been more accommodating towards F&B operators, as core sections of high streets became affordable in terms of rentals and chances of securing a spot in a shopping centre increased. This is the result of landlords struggling to maintain occupancy and using F&B as differentiators. According to JLL’s High Street Shops Vacancy and Trade Mix survey, the share of F&B increased from 12.5% as of 4Q19 to 14.9% at the end of 1Q23. During the same period, rentals dropped by 46.7%, making high street shops in core areas more affordable to F&B tenants.

While the number of licenced restaurants in Hong Kong has continued to grow, the pandemic has surely posed challenges to the industry. During 2020, when substantial lockdown and social distancing measures were in place for most of the year, the average monthly receipts per licenced restaurant dropped by over 30% (Figure 2).

However, as new COVID-19 cases stabilised in the second half of 2021, receipts picked up swiftly by 14.8% in 2021. Nonetheless, the lower average receipts per restaurant can also be attributed to underlying trends, such as the dropping size requirements of “General Restaurants” and an increasing number of takeaway-only or grab-and-go F&B tenants, as indicated by the growth in the number of “Light Refreshment Restaurants.”

Figure 2: Average monthly receipts per licenced restaurant

Source: Census and Statistics Department, Food and Environmental Hygiene Department, JLL

Hong Kong has long been an attractive destination for foreign restaurants. The city’s extensive flight network makes it easy and cost-effective for restaurants to replicate recipes with the same ingredients they use back home, including fresh ones. Additionally, Hong Kong customers have diverse backgrounds, and many are savvy diners with a deep understanding of foreign food cultures.

In the 2019 pre-pandemic period, F&B operators accounted for 68% of all new international brands entering Hong Kong for the first time. This share surged to 85% in 2021 before coming down to 74% last year. F&B operators accounted for only 15% of all new international brands entering Hong Kong in 2013, highlight the growing importance of the sector in the city.

Looking ahead, the F&B sector in Hong Kong is expected to face a challenging landscape due to elevated costs of living, ongoing supply issues and labour shortages. However, amidst every difficulty lies opportunity. Over the next five years, Hong Kong is set to see numerous infrastructure projects, as well as new office, retail and residential supplies in both core and non-core submarkets. As shoppers and diners increasingly seek engaging and unique experiences, improved connectivity and new supplies will provide more options for F&B operators with quirky concepts to capture market demand.

For example, the emerging office hub in the West Kowloon area, where the West Kowloon Cultural District and the Express Rail Link are located, is set to become an important pioneer and growth driver of the Harbour Metropolis. With a cluster of current and upcoming high-quality office, hotel and retail spaces – many with sea views and alfresco dining areas – this hub will attract a diverse and affluent customer base and provide excellent opportunities for F&B operators to thrive.

Unlike the last decade, which saw extremely limited new commercial supply in core districts, the next five years will see a sizable expansion of commercial projects in key submarkets such as Central and Causeway Bay. These include projects such as the Central Site 3 development and the redevelopment of the Excelsior Hotel. The completion of these projects will not only enhance the market vibrancy and ambience but also boost the working population and patronage, creating valuable customers for many F&B operators.

Finally, opportunities for F&B operators also exist in the areas where people live. Kowloon City, Yuen Long and Tuen Mun are the top three districts with the most private residential completions in the next five years. We expect these areas to be among the fastest-growing markets to watch out for, driven by rapidly expanding residential communities.

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