Fast food outlets in fight for survival

PUBLISHED : Monday, 15 December, 1997, 12:00am
UPDATED : Friday, 28 October, 2016, 9:17am

One in five Hong Kong fast food restaurants could be forced to close within the next 12 months as a result of the regional financial crisis, it was claimed yesterday.

Cafe de Coral Holdings chairman Michael Chan Yue-kwong said it would be 'survival of the fittest' in the fast food sector as shrinking demand accounted for up to 20 per cent of the 5,000 local stores.

Although the crisis had seen people shift from Chinese restaurants to fast food outlets, there were worries they might eventually avoid eat-outs altogether, he added.

In the past two months, turnover for the 115-shop Cafe de Coral chain had jumped 12 per cent, Mr Chan said.

This was not surprising, since average spending per head in a Cafe de Coral outlet was $26, compared with $100 in a Chinese restaurant.

But Mr Chan warned this might not continue if the crisis worsened and people ate in.

Already speciality restaurants such as Ah Yee Leng Tong and Spaghetti House had seen turnover growth slow as they were hit by plunging tourist arrivals, he said.

'Within such a difficult operating environment, what fast food owners can do is control operating costs, widen product range and open up sources of income,' he said.

Analysts said the potential shut-down aroused concern for the prospect of fast food chain Fairwood Holdings which has lost money in the last three years. It will announce its interim results on Thursday.

However, Mr Chan believed the financial downturn could eventually help fast food shops, putting many in a more favourable position to bargain for lower rents.