Food and beverage industry in Hong Kong posts first annual decline in revenue since Sars, with 5.9 per cent drop

Hong Kong’s food and beverage industry has posted its first annual decline in earnings since the Sars outbreak in 2003, with greater headwinds expected amid the coronavirus epidemic.

Revenue for the restaurant sector fell 5.9 per cent to HK$112.5 billion (US$14.5 billion) in 2019 from the previous year, according to provisional data from the Census and Statistics Department released on Wednesday.

A government spokesman noted the figure of HK$26 billion for the final three months last year was a sharp 14.3 per cent plunge from the same period in 2018, marking the largest fall since 2003, when the city was hit by the severe acute respiratory syndrome (Sars).

Hong Kong slips into recession: economy shrinks 3.2 per cent in third quarter 2019

He said the ongoing anti-government protests, sparked by the now-withdrawn extradition bill, and “intensified violence” amid the civil unrest had caused severe disruption to the industry, warning of more uncertainty.

“The food and beverage sector has been facing an even more difficult business environment recently due to the threat of the novel coronavirus. The outlook down the road depends critically on how this situation will evolve,” he said.

By Wednesday, there were more than 27,000 confirmed cases in mainland China, with the global death toll at more than 550.

In Hong Kong, six new cases were reported over Tuesday and Wednesday, bringing the local tally to 21, including the city’s first fatality linked to the outbreak. Some of the recent cases reported had no travel history, signalling possible local transmission.

David Leung Chi-wai, chairman of Seafood Delight Group, said some of its 12 restaurants registered a drop in revenue of between 50 to 70 per cent over the past 10 days, compared with normal figures.

“No districts in the city are spared from this,” he said. “Firms can’t earn enough to pay workers,” Leung added, noting that an industry group and some trade chambers had urged developers to roll out rent relief measures.

He said some businesses in the sector had closed their doors or shut down branches.

Gordon Lam Sui-wa, who runs the 616 hotpot shop in Whampoa, said 15 outlets under the brand, which he partnered, had seen business decline after Lunar New Year.

Lam said the restaurants in residential estates suffered a drop in revenue of 20 to 30 per cent from the same period last year, while sales figures at other outlets in busy districts such as Yau Ma Tei, Mong Kok, Tsim Sha Tsui and Causeway Bay plunged by more than 50 per cent.

He said he opened a separate eatery in Tai Kok Tsui, but the business environment was quiet as firms nearby had resorted to allowing staff to work from home amid the coronavirus outbreak.

“I can’t give a first quarter forecast, because the situation is changing daily. It really depends on whether the government can fully close the city’s borders,” he said, referring to calls for a complete shutdown of Hong Kong’s checkpoints with mainland China to stem the contagion.

“Our revenues may slump further if all borders are closed and no visitors come, but if there is a widespread outbreak in the community, it’s hard to imagine what would happen ... Revenue may drop 80 to 90 per cent.”

While restaurants weathered a decline, food delivery platform Foodpanda’s marketing head in Hong Kong Alex Law Ho-yin said the firm’s orders were three times that of last year during Lunar New Year.