Hong Kong restaurant operator is next to cut salaries of board members, management as fewer diners eat out amid coronavirus outbreak

Hong Kong restaurant chain Tsui Wah Holdings will cut the salaries of board members and senior management to rein in costs, as the fallout from the coronavirus outbreak starts to reverberate through the food and beverage industry.

All nine directors and two senior managers will take a 30 per cent pay cut for the three months from February 1, the group said in a stock exchange filing on Friday. The move represents “the very first step of cost regulation measures” following the viral outbreak in China, it added.

The decision reflects a sense of foreboding for Hong Kong businesses in the new year, after battling through social unrest for most of 2019 amid the city’s worst political crisis in decades. It follows an announcement on Thursday by the city’s biggest cosmetics retailer Sa Sa International that it will cut its executive directors’ pay to prepare for tougher times ahead.

“Restaurant operators and retailers [in Hong Kong] have fallen into a desperate situation,” said Louis Tse Ming-kwong, managing director of VC Asset Management. “If the situation deteriorates further, more senior executives in these industries may have to take no-pay leave. They may need to make more sacrifices to save their business from collapsing.”

Swire Properties announced retail sales at its shopping mall in Pacific Place, Admiralty, dropped 16.8 per cent in 2019. Sales at its Cityplaza mall in Quarry Bay slipped 2.9 per cent, while its Citygate Outlets in Tung Chung saw a 4.5 per cent decline, according to a statement filed to the Hong Kong stock exchange on Friday.

The coronavirus outbreak, which originated from the city of Wuhan in central Hubei province, has claimed more than 630 lives and infected at least 31,000 people, mostly in mainland China. It comes as a blow for local businesses that decided to switch their focus to the mainland market to escape the unrest in Hong Kong.

The group is also setting up a crisis management committee to assess the impact of the epidemic on its operations and financial performance, Tsui Wah said in the filing. “If the epidemic and the socioeconomic environment further deteriorate, all members of the board will be subjected to further adjustment.”