Restaurant's closure sparks cost concerns

PUBLISHED : Wednesday, 10 March, 2010, 12:00am
UPDATED : Wednesday, 10 March, 2010, 12:00am

The catering sector has expressed concern over the challenge posed by rising rents and food prices following the closure of a restaurant in Tseung Kwan O yesterday.

Staff at the restaurant in East Point City, Chinese Kitchen, went to work as usual in the morning, only to find the business had folded.

Sixty-one workers sought help from the Labour Department, saying the restaurant, which had operated for about a year, owed them wages. The department said officials would try to contact the owner and were still calculating the workers' unpaid wages as well as compensation.

Thomas Woo Chu, Hong Kong Catering Industry Association vice-president, said the closure did not surprise him. 'I believe we will see more Chinese restaurants close in the near future. Like every year, the period after the Lunar New Year is very difficult for us,' he said. 'What is more, our costs have surged. For some Chinese restaurants, we are talking about a rent increase of more than 100 per cent.'

Chinese Kitchen is the first big Chinese restaurant to close since the holiday. In the same period last year, at least four closed.

Woo said landlords played hardball when it came to restaurants.

'Even last year when the economy saw a huge dip, we also experienced a rent increase of 20 to 30 per cent,' he said, adding that food costs also posed difficulties for catering businesses.

The president of the Federation of Restaurants and Related Trades, Simon Wong Ka-wo, agreed that the sector was facing a hard time, but he was not as pessimistic as Woo.

'Yes, we are facing increasing costs, but then business is far better than it was last year. The closure of this restaurant is only an isolated case. It is not a landmark restaurant, it is not a chain restaurant,' Wong said.

'In general, rents have increased by 25 to 30 per cent. Having said that, in 2006 and 2007 when the economy was much better, we saw rent increases of 80 to 200 per cent.

'For food costs, seafood and dried seafood prices have increased by about 30 per cent. Even for sugar, the price is 60 per cent higher than that of last year.'

Wong said the sector was concerned about the rising costs but was relieved that people were willing to spend.

'Compared to last year, we see more people are digging deep into their pockets when they come to restaurants. It is such a good sign.'

Hard to stomach

Restaurants and caterers are facing higher costs

In the space of a year, rent has gone up by as much as: 30%

The price of sugar, meanwhile, has increased by: 60%


Send to a friend

To forward this article using your default email client (e.g. Outlook), click here.

Enter multiple addresses separated by commas(,)