Hong Kong’s Lan Kwai Fong operators claim cheap 7-Eleven store alcohol is killing business

Bar operators complain that competition from cheap outlets is harming their earnings, but drinkers say Lan Kwai Fong is just too expensive

PUBLISHED : Saturday, 23 July, 2016, 11:02am
UPDATED : Monday, 25 July, 2016, 6:43pm

It’s only 10pm on a Wednesday night and there are already people loitering outside 7-Eleven in Lan Kwai Fong, tossing their empty beer cans onto an ever growing pile of discarded leftovers.

Three German tourists, who did not want to be named, summed up the general thinking of everyone who has ever bought a drink at 7-Eleven: “It’s fast, there’s no service tax and most importantly it’s cheap.”

While partygoers may revel in the low cost of inebriation that the convenience store offers, bar owners and operators are worried.

Underage drinking fuels worrying trend in Hong Kong, amid lack of regulation

“Lan Kwai Fong used to be considered ‘hip’ in the 90s. It’s just too noisy now, there are always bottles lying on the street, a lot of people just drinking outside on the steps beside 7-Eleven,” said Peter Karl, manager of long-standing bar Schnurrbart.

The German bar, which has been in operation for over 25 years, lies right next to a 7-Eleven on D’Aguilar Street. According to Karl, Lan Kwai Fong now has an “image problem”.

7-Eleven was part of that problem, he said. Since the store first opened its doors in 2013, bars in the area have seen a dip in sales. Another long-standing bar, Stormies, cited a 20 per cent decrease in sales since the convenience store opened its doors.

Total bar sales across the city are on the decline. First quarter sales dropped by 6.4 per cent in volume compared to the same period in 2015, according to the Census and Statistics Department. They are down a sharper 17.7 per cent on the figure for the final quarter of last year.

There is no part of Hong Kong that is better identified with drinking than Lan Kwai Fong. Walk through it on any given night and most of the bars will be advertising their happy hour deals – which can last from 3pm until even 11pm. But even with extended deals – an effort to combat revenue loss – bars cannot compete with their neighbouring convenience store.

Why Lan Kwai Fong has seen a surge in African drug dealers: SCMP goes undercover with the Hong Kong police

A pint of beer at Schnurrbart costs HK$75, a price so high that it has even driven away native German customers, according to Karl. Beer at 7-Eleven can cost as little as HK$10.

“7-Eleven is not a convenience store. It is a liquor store. Ninety-seven per cent of it is alcohol and 3 per cent is snacks,” said a senior operations manager with Cafe Deco Group, who did not wish to be named. The group operates 10 bars in Hong Kong, including Stormies and Tonic in Lan Kwai Fong. He said the convenience store had “killed the business. The competition is no longer the bar next to us; it is the 7-Eleven next to us.”

The store had also brought unwanted customers to the bars, said Stormies’ manager Harry, who did not want to give his full name. “People come in using our toilets, and they bring their own drinks in. We have had to hire security.”

Hiring security had been beneficial in keeping drunk revellers out of bars, but they had imposed another cost on the already struggling bars, the Cafe Deco Group manager said.

Economic and tourism downturns are also contributing to a dip in revenue. Big spenders in Lan Kwai Fong used to be from the finance and professional services industry, according to Spencer Chan, director of the Lan Kwai Fong Association. But after the economic downturn and Brexit, Chan said the Lan Kwai Fong market was “shaky”.

Alcohol-fuelled nightclub fights on the rise in Hong Kong’s Lan Kwai Fong

Another issue that plagues Hong Kong bars is underage drinking. Bars and restaurants that sell alcohol are required to have a liquor licence, which prohibits them from selling alcohol to those under 18. However, Hong Kong allows retail stores to sell alcohol without such a licence, creating a loophole for youngsters.

“Right now we’re talking seriously with the police about the underage drinking issue, but it’s also a legislative issue. The dilemma is that we don’t have an ordinance or common law to restrict the sale of liquor to underage kids,” Chan said.

In May, the Lan Kwai Fong Association sent a letter to the Liquor Licensing Board urging the government to impose liquor licensing laws on retail shops, such as 7-Eleven.

More than 100 establishments have signed the association’s petition, which highlights the issues seen every night in the party district.

“Glassy-eyed teenagers stumbling outside retail shops, particularly 7-Eleven, or passed out after a lengthy drinking session ... have threatened the well-being of both teenagers and visitors,” the letter reads.

The association wants retail shops to be barred from selling alcohol to anyone under the age of 18 in line with laws in other countries such as Britain and Singapore.

In response to the letter, the Food and Environmental Hygiene Department, which oversees the licensing board, said the government would not take any action against retail shops as there was no restriction on the sale of alcoholic drinks by such outlets.

A spokesman for the 7-Eleven chain said company policy was not to sell alcohol to minors despite the absence of a legal requirement and “any suggestion that we have been doing otherwise is unfair”.

Surprisingly, Schnurrbart did not sign the petition. “If 7-Eleven closes its alcohol sales, then the young people won’t come anymore,” Karl said.

Karl may be right. Without 7-Eleven, the two young girls who stood outside the convenience store drinking from a King Roberts vodka bottle that Wednesday night may no longer have anywhere to go. “It’s too expensive to get drunk here,” they said.