Housing costs eat at restaurant receipts

PUBLISHED : Wednesday, 23 March, 1994, 12:00am
UPDATED : Wednesday, 23 March, 1994, 12:00am

SOARING housing costs kept people out of restaurants, biting off the volume of restaurant receipts in 1993.

Total volume of restaurants receipts fell three per cent to $48.3 billion last year, according to government statistics released yesterday.

Chinese restaurants were hardest hit because the high cost of housing weakened consumer spending, causing a seven per cent fall in volume of receipts, while value rose four per cent because of inflation.

Weaker spending saw diners switch sectors, causing receipt volumes in lower-priced fast food outlets and non-Chinese restaurants to rise four per cent and five per cent, respectively.

Bars recorded the strongest growth, rising five per cent in volume and 21 per cent in value.

The Federation of Hong Kong Restaurant Owners said that the high cost of housing was a double-edged sword, because it cut into consumer spending and squeezed out restaurant owners as well.

''Last year, there was a large-scale closing down of Chinese restaurants, resulting from slower business and high rentals.

''There were many instances where a restaurant had to close when the lease of its premises came up for renewal, because the restaurant owner could not afford the new rents, which increased by multiples and not a certain percentage ,'' said the federation's president, William Mark.

He said in the past, when a restaurant closed, it was almost a sure thing that another restaurant would open in its place.

''However, this is not happening. The high overheads in operating a restaurant are deterring potential investors from going into the business,'' he said.

He said that Chinese restaurants should try to keep costs down to remain competitive.

High costs aside, Chinese restaurants are also coming under strong competition from non-Chinese restaurants, including Southeast Asian restaurants where prices are slightly lower.

Mr Mark said that the average bill at such restaurants ranged between $50 and $100, while an average bill at Chinese restaurants usually cost $100 and above.

Mr Mark said that the strong performance by the bar sector was driven by karaoke lounges, which are extremely popular in Hong Kong, especially among younger people.

''The number of karaoke bars have increased significantly in recent years and contributed to the growth in the sector.

''It was not driven by a rise in business in bars such as pubs,'' he said.

Mr Mark was pessimistic about the overall outlook for the restaurant business.

''I don't foresee the situation improving in the near future, because rents are not likely to come down in the short-term.

''The situation will continue to take a heavy toll and people will continue to cut down on expenses by spending less on meals outside [the home],'' he said.