Hong Kong restaurants get creative, rely on deliveries to stay afloat as Covid-19 curbs keep patrons away
- Third wave of infections a major blow, with tighter curbs on opening times, number of diners
- Bars, restaurants hope Hongkongers unable to travel over Christmas will spend more in city
Hong Kong’s restaurants and bars are reeling from tough Covid-19 restrictions and the tourism slump. In the last of a three-part series on the city’s battered retail scene, the Post examines how food and drink businesses coped, and what they’re counting on to survive. Read parts one and two here.
Her business took a severe hit through the second half of 2019, as the unrest continued, tourism suffered and fewer mainland Chinese visitors came.
She shut down four restaurants, retaining only her chain of three Shanghai Lane dumpling outlets in Central, Tin Hau, and Happy Valley.
“July was the absolute worst,” she said, seated in her Central outlet along trendy Gough Street. “The streets were empty and so was the restaurant.”
The toughest rules came in July. For about six weeks, restaurants could not have more than two guests per table, and evening dine-in services were banned.
That brought business practically to a halt for more than 16,000 licensed restaurants across the city. From July to September, restaurant takings plunged to a record low of HK$17 billion, down 43 per cent from HK$29.85 billion over the same period in 2018.
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“Delivery orders grew by about 30 per cent in the Central branch in July, when the dine-in ban was first imposed,” Kwan recalled. “But my dine-in business dropped 80 per cent at all three branches.”
Ravaged by the pandemic, Hong Kong’s food and drink sector was forced this year to get creative, spot new ways of doing business and reach new customers, or risk going bankrupt.
Simon Wong Ka-wo, president of the Hong Kong Federation of Restaurants and Related Trades, said about 2,300 of the city’s 16,000 eateries had shut down for good so far this year. However, about 300 new outlets opened, as their business owners took advantage of the sharp decline in rents.
Based on restaurant receipts of more than HK$107 billion in 2018 – the last good year before business was affected by the social unrest and the pandemic – he estimated that restaurant takings were down 25 per cent this year, or more than HK$25 billion.
“The impact of Covid-19 on the catering sector has been devastating,” Wong said.
Online delivery has helped a lot and there’s big potential to grow, but it may never fully replace revenue from dine-in patrons and tourists
Deliveries a way to expand reach
Struggling restaurant owners found some relief this year by hopping on the food-delivery bandwagon that has been growing in recent years, thanks to online platforms such as Deliveroo, Foodpanda and Uber Eats.
Pandemic restrictions meant more people staying at home, as offices introduced work-from-home policies and schools were closed for several months. Cooped-up Hongkongers began ordering more food to be delivered to their door.
When the government restricted the number of people allowed into restaurants and bars, and limited opening hours, home deliveries went up too.
With two decades in the business, restaurant owner Kwan was quick to spot the potential in increasing deliveries while her outlets stayed mostly empty.
“I had to come up with new ideas because of the pandemic and test them out,” she said.
She joined Deliveroo’s off-site project called Editions, which allowed restaurants to use a central kitchen to prepare food for delivery only, and to expand their reach to customers in new areas. There are four Editions kitchens in Sai Ying Pun, Wan Chai, Quarry Bay and Kowloon Bay.
Kwan redeployed her chefs to the off-site kitchens in Quarry Bay in April and Kowloon Bay in October, and orders started coming in.
She was inspired to launch two new “virtual brands” in the midst of the pandemic, the vegetarian Go Green and Sichuan Go Mala, both only available for delivery through Deliveroo’s Editions.
The delivery platforms stepped up as well, expanding their presence beyond the financial hub on Hong Kong Island to residential and commercial areas across the city.
Ultimately, we’re a food delivery company that partners with restaurants. If they go out of business, we don’t have outlets to partner with
Deliveroo said it now had more than 8,000 partner restaurants and had grown its fleet of delivery riders from 4,000 in January to 7,000.
General manager Brian Lo Ka-chung said the company had more plans to expand coverage and work with restaurants to their mutual advantage.
“Ultimately, we’re a food delivery company that partners with restaurants. If they go out of business, we don’t have outlets to partner with,” he said.
Uber Eats declined to provide numbers but said it had more users this year and began seeing more orders from residential areas. It expanded its services over the past year to Tuen Mun, Island South, Tin Shui Wai and Chai Wan.
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Foodpanda said it had more than 11,000 restaurants on its platform as of October, and commercial director Oliver Frost said it was constantly looking for ways to help its partners through the current challenging times.
Since February, it has rolled out new pricing strategies, including allowing restaurants to delay payments to the platform by up to three months. In August, it scrapped a fee previously imposed on restaurants that joined its list.
Restaurant owner Kwan said: “I definitely miss the times when the restaurants were full of customers. Online delivery has helped a lot and there’s big potential to grow, but it may never fully replace revenue from dine-in patrons and tourists.”
Bars counting on year-end cheer
The other group of food and drink entrepreneurs who have struggled through the year are owners of bars and nightclubs that were ordered to close each time Covid-19 infections spiked, staying shut for a total of almost four months.
Wing Chin Chun-wing, vice-president of the Hong Kong Bar & Club Association, estimated that from July to September, bars lost at least HK$260 million in net profits with each losing at least HK$100,000 every month.
Bars suffered a 62.7 per cent drop in restaurant receipts over those three months, performing worst in the catering sector. There are about 1,280 bars and pubs in the city and most have survived only because of the government’s various subsidy schemes, he said.
The owners of 30 to 40 bars decided to give up this year and did not renew contracts for their premises, but with rents plunging by 20 to 30 per cent, others stepped in to take over.
“So far, there hasn’t been a wave of closures,” Chin said.
Business bounced back recently as pandemic restrictions were eased with a fall in infection numbers.
“Since bars were allowed to open until 2am serving a maximum of four people per table, business has rebounded, especially during weekends or holidays,” Chin said.
Christmas is the peak season for the bar industry. As long as social distancing rules are not tightened again, we don’t need to worry about our business
Bar owners were now racing to put up their Christmas decorations and unveil festive offerings such as lucky draws to bring their patrons back, Chin said, adding that they hoped people unable to travel over the year-end would be prepared to splurge.
“Christmas is the peak season for the bar industry. As long as social distancing rules are not tightened again, we don’t need to worry about our business,” he said.
Various initiatives have sprouted on social media to help the food and drink sector by encouraging people to go out and spend.
Lifestyle media group Tatler’s “United We Dine” campaign launched this month has a lucky draw with top prizes of luxury hotel staycations. To take part, diners have to submit receipts from more than 100 participating restaurants.
Last week, the Hong Kong Tourism Board started a five-week Wine and Dine Festival – mostly held online – offering discounts from more than 100 international wine merchants and more than 500 restaurants.
More than 30 bars got together early this month to hold the first Hong Kong Cocktails Week, a month-long event for customers to go bar hopping and try special drinks at participating outlets.
We’ve taken a hit this year, but we’re still standing
Manuel Palacio, co-founder and CEO of restaurant chain Pirata Group, is pinning his hopes on the Christmas season to end this dismal year on a positive note.
The group, which has 15 restaurants, experienced a roller-coaster ride as it opened two outlets of The Pizza Project Italian restaurants in Central in January and in Wan Chai in July, and expanded its Pici Pasta Bar in February.
After suffering its “worst week ever” when the third wave of Covid-19 infections struck in mid July, the group closed all its restaurants as well as its back office as a precaution to keep staff and guests safe.
“We’ve taken a hit this year, but we’re still standing,” said Palacio.
His team used the down time to come up with fresh ideas, expanding deliveries and creating new meal concepts such as Friday brunch or “frunch” and weekend “dunch” somewhere between lunchtime and dinner time.
Palacio expects this Christmas to be unlike past seasons, when people tended to get together early in December before leaving to spend the holidays overseas.
“We foresee smaller groups of friends and family gathering and sharing good times during the festivities past December 20 as travelling to see loved ones outside Hong Kong will be more challenging,” he said.
Felix Lam, 50, founder and creative director of Visual Media, a video production firm with about 18 staff, is already planning to hold a Christmas party as usual this year in the office.
“This year we are doing OK, so I’ll keep the budget for the Christmas party with more lucky draws,” he said. “Amid the pandemic, people are usually not in a good mood, so I hope to cheer up my employees and brighten up their festive mood. This is also a good way to boost their morale.”
