Pandemic over yet sales are worse for some Hong Kong Food & Beverage outlets than they were during it : why ?
By HK Lawyer AJ Halkes Barrister-at-Law
Some Hong Kong operators are seeing sales below those during the Covid period; when Hong Kong was almost totally isolated from the world. Despite this reopening of Hong Kong and the increasingly busy airport; it has not translated into a resurgence of customers or sales for everyone after a disastrous summer for some.
… what are the reasons?
Having discussed this with multiple operators; these seem to be a few factors : –
A. The spending population has reduced. We saw departures during the Covid years for various reasons, including families with children who needed schooling, some missed home countries with less restrictive rules and there was emigration. As the city became semi-inescapable and expensive to move in and out of, some stayed away and others spent a lot of money here; leading to solid sales for some outlets.
Of those who left, perhaps a wage earner has now returned (or never really left) but a departed family still isn’t spending here.
B. Hong Kong residents see cheap fun opportunities away from the city by travelling a short hop into other areas of China, taking advantage of lower prices and new refreshing landscapes, at much reduced costs. Weekends and public holidays are seeing these departures take significant spending out of Hong Kong.
C. Tourists are not high-spending types many being more interested in taking photographs than consuming quality goods or services, even staying in hotels outside Hong Kong. New low tax luxury goods buying destinations also match Hong Kong; so the shine is off for high spenders and exchange rates make it an expensive destination.
D. Residents have simply changed their spending patterns with many more dining at home, more buying online and a fast delivery services war pulling trade away from F&B outlet operators. Habits that were formed during Covid are hard to break; further reducing retail business viability as seats being paid rent for now sit empty.
E. Overseas holidays see Hong Kong residents travel again to Taiwan, Thailand, Japan or anywhere cheap and regional. These trips still cost money and on return (having spent significantly) residents aren’t very inclined to continue spending much locally on dining out.
F. Too many F&B outlets are chasing the same customers in some areas, new buildings and high rise developments have actually added “seats” so areas like Central are now probably over-supplied.
G. Rents are not cheap, however this old complaint is wearing thin and is easily solved via turnover rents. Many landlords have been smart enough to realise that their success depends on working with tenants.
ajhalkes.com – Turnover Rent Article
These are just a few dimensions of this multi-faceted challenge but can it be met?
The reality is Hong Kong is a great, safe city that’s fun to visit and explore and invest in; that message will go some way to meeting the challenges and needs to be amplified;
Now the Government has opened up more visa-free entry for tourists the focus has to be on making short term visits cheaper and longer stays more affordable.
There are short-term accommodation options that work well in most countries and that’s a good place to start another discussion.
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