Hong Kong restaurants back in busy mode as social distancing measures are eased, but recovery still a long way off
- Restaurants do roaring business over the weekend as malls and food and beverage operators launch Mother’s Day promotions
- The worst for the retail sector is over as sentiment is starting to pick up, says Cusson Leung of JPMorgan
Many mall and restaurant operators have taken advantage of the government’s relaxed social distancing measures to launch marketing campaigns to boost sales, ranging from shopping vouchers, discounts, free parking and other giveaways to boost sales.
The promotions worth millions of dollars coincided with Mother’s Day on Sunday, boosting the catering sector’s receipts to HK$280 million (US$36.1 million), said the Hong Kong Federation of Restaurants and Related Trades. Takings by Chinese restaurants were up to 80 per cent higher than normal while western eateries did 60 per cent more business, it added.
Walter Lok, director of BriKetenia which operates a French restaurant in Harbour North shopping centre, in North Point, said sales doubled last weekend after the landlord Sun Hung Kai Properties launched promotions. Part of it is offering shoppers a chance to stay in the adjoining five-star Hyatt hotel and discount coupons.
“The promotion helped,” said Lok.
Hong Kong’s retail sales fell by a record 37 per cent year on year in the first quarter, figures from the Census and Statistics Department showed. Data for the restaurant sector was nearly as bad, with overall revenue sinking 31.2 per cent year on year to HK$21.7 billion (US$2.8 billion) in the first quarter.
Cusson Leung, managing director and head of Asia property and Hong Kong research at JPMorgan, said the retail market is starting to recover, with domestic consumption rising following the easing of social distancing rules. But, he added, the recovery of tourism-related consumption might start only by October.
“My view is that the worst has passed,” said Leung. “Even if the border closures are relaxed and mainlanders are allowed entry … it will still take two to three months before [tourists] have the confidence to travel,” Leung said.
Wharf Reic, the owner of Harbour City and Times Square, said it will distribute 840,000 gift coupons valued at HK$112 million to shoppers, adding that it hopes to generate sales of around HK$1.8 billion through this campaign.
“We believe that the recent drop in local infections and relaxation of social distancing are conducive to the improvement in the business environment for the retail trade,” said a Link Reit spokesman, which has 98 shopping centres in Hong Kong.
Meanwhile, #SaveHKFnB, an alliance of 600 restaurants and bars, has voted Swire Properties as the city’s most cooperative landlord.
Swire was one of the first landlords to offer rental concessions to support tenants affected by the anti-government protests that started last June. A spokeswoman said the company has also launched new sales promotions and extended relief measures for tenants amid the coronavirus outbreak.
As part of the same survey conducted by #SaveHKFnB, the group’s members saw revenues drop by an average of 50 to 80 per cent year on year in April.
Over half of the participants in the survey said their rent to revenue ratio had exceeded 30 per cent, making their business unsustainable. The group this week launched an online voucher programme to boost its members’ revenue.
“Cash flow is one of the things that worry restaurateurs the most,” said Alan Lo, co-founder of the Cantonese restaurant Duddell’s. “Monthly expenses such as salaries, rents and ingredients are still pressing and many of us are left with no option but to close down our businesses. Average rent to revenue should be 10 to 15 per cent.”
“If your business dives 80 per cent, and your rent is just down 20 per cent, how much relief can it bring?” Lo asked.
