Not enough bankers: why some Hong Kong restaurants’ takings have fallen this year
2016 has left restaurateurs with a lot to chew over: expense-account bankers losing their jobs, Hong Kong’s global image taking a hit, landlords still jacking up rents. It’s forced mid-range and fine dining restaurants to be more creative
High rents are often blamed for the woes of Hong Kong’s restaurateurs, but the past 12 months have brought other challenges to pricier establishments as the volume of diners has noticeably thinned. Operators cite a number of reasons for the downturn, including job losses, especially in the finance industry, the political climate and the fact that diners are increasingly spoilt for choice.
Some mid-range and fine-dining restaurants have seen a drop in business of at least 10 per cent compared with 2015, and expect the rough patch to last another 18 months. Owners are shutting up shop at 10pm – the time last orders are usually called.
“Before, there would be a financial crash, and after a few months business would come back again. But since September last year, business ... in general has been suffering,” he says. “Since summer ended, it has been difficult.”
Although a loyal following is keeping his restaurants ticking over, Orrico says some regular customers haven’t been seen for a while, especially those working in banking and aviation.
“We were happy at first to get bookings for parties, but then we found out they were going-away parties,” he says with a wry smile.
Orrico opened Picnic on Forbes in Kennedy Town in the spring of 2015 in hopes of attracting mid-market clientele, but the newly gentrified neighbourhood has been a disappointment.
“We expected more nightlife in the area, but some people think it’s too far, even though it’s only a few stops on the MTR [from Central]. In Paris, 45 to 50 minutes on the Metro to get to a restaurant is normal.”
The downturn is encouraging restaurateurs to be more flexible and imaginative, and in an attempt to lure more diners, Orrico is mixing things up. He’s held live jazz nights, hosted visiting Parisian butcher Hugo Desnoyer, and revamped brunch menus. Picnic on Forbes, for example, is offering poulet frites, or roast free-range chicken with fries, plus a choice of starter and dessert for a reasonable HK$288.
“We try to give an alternative with good quality at reasonable prices, but I’m not optimistic. I don’t see any positive signs so far,” he says.
“You got Goldman Sachs laying off 25 per cent of their workforce; you got Deutsche Bank laying off people as well. They are expats with expendable income and they are all leaving Hong Kong,” he says.
The restaurant, named after his grandmother, opened in Sai Ying Pun in July.
Green had already built a strong fan base from his time at 22 Ships, in the portfolio of restaurants under Jia Group, headed by Yenn Wong.
However, even regular diners don’t show their faces as much as they once did, he says. “One customer told me he hasn’t flown so much for work before. He’s only here maybe 10 days a month,” Green says.
The scene has also become more competitive, with new upscale restaurants popping up all the time,
Green and Orrico agree; the market is not elastic and can only accommodate so many.
“At some point we’re going to reach critical mass. The problem with Hong Kong is that there is so much money behind the restaurants that they [investors] won’t ... just close the doors and say, ‘Actually, you know, it didn’t work’. There’s too much face involved,” Green says.
Orrico says although 22 Ships, on Ship Street in Wan Chai, sees a steady stream of diners, others in the street, such as French fine dining Restaurant Akrame and its sister establishment Atelier Vivanda, appear to be quiet.
Akrame Benallal, chef-owner of both, begs to differ. As proof of his commitment, in June Benallal bought out his local partner to wholly own Restaurant Akrame, although the partner is still involved in casual bistro Atelier Vivanda next door, which specialises in steak and potato dishes.
Benallal says other restaurateurs, especially in fine dining, had told him 2016 has been particularly challenging, but he is optimistic the economy will improve.
“We are well aware of concern about the economic climate in Hong Kong at the moment. To cope with this, we have tried to diversify our clientele by providing a more casual dining experience with an availability of à la carte or special events,” he says. “We are promoting more events to give something new and interesting for our guests to experience. We have also been planning a lot of four-hands dinners with local chefs that are one of a kind. Most recently, we worked with chef Vicky Cheng [of VEA] and chef Philippe Orrico.”
Todd Darling, of Homegrown, which owns Linguini Fini, Stone Nullah Tavern, Posto Pubblico and Homegrown Foods, hasn’t seen such a grim economic climate in his 13 years in Hong Kong.
“This is the toughest I’ve ever seen it, especially this summer,” the New Yorker says. “I came here just after Sars and it was bad so I don’t have that perspective. The first summer we had a restaurant [Wagyu] was 2006, and it was a steady climb until the financial crisis in 2008-09.”
Seeing other restaurants closing recently, he thought it would be easier to hire staff, but that hasn’t been the case. “We think they are actually leaving the industry. You can do construction and earn nearly double the salary, and it’s daytime hours.”
Although Darling acknowledges that landlords are not the only problem facing Hong Kong restaurants, he says rent negotiations are tough negotiation unless one is willing to walk. It would cost US$1 million to move to a new location, which is risky, he says.
“That’s why landlords think they can still get more rent out of us. I don’t think rents have come down in SoHo. Landlords say Café de Coral is doing well, but I’m not Café de Coral.”
Looking at the bigger picture, Darling sees problems resulting from structural changes in the city’s economy and politics. He believes fewer people want to move to Hong Kong, and cites a recent survey that found one in four Hongkongers wants to emigrate.
“When people overseas hear freedoms are being eroded they think twice about relocating their business here,” Darling says. “The booksellers disappearing, that really shocks the international community. The expats you are getting now are not the ones you were getting 10 or 15 years ago.
“Before 2008, I had friends in the finance industry who had huge housing allowances, spending so much company money entertaining people. We used to have people drinking Dom Perignon on Wyndham Street at Wagyu. They weren’t paying for it – the banks were. They are long gone.”
In July, Linguini Fini on Elgin Street started opening for breakfast to boost business, and Darling says business has been good, with customers spending HK$49 for a sandwich and coffee. “If they spend HK$45-HK$50 they won’t think too much about it. A chai latte at Starbucks is HK$35.”
Darling is nevertheless bracing for more bad news. “Last summer was also bad, and at the time I thought it couldn’t be worse, but it was worse. It’s uncertain when it will pick up again. I think it’s going to get worse in the next few years. It’s a snowball effect, people tightening their belts more.”
He blames the government for its failure to improve political and economic sentiment to inspire people’s confidence.
“I feel like local people are feeling very conflicted. What’s going on in Legco is unprecedented. There’s a real potential to demotivate people even more. A bookseller was kidnapped, why not you? I think that really affects people. When you have housing prices so high, people don’t want to spend. There’s no hope.”
Regardless, the restaurateur is still on the lookout for a silver lining. “Why should it get better? What are we doing as a city to get people to come? I have faith, the city is resilient. I really love the people here. I’m not bailing any time soon.”