Can Coffee and Cake save the Hong Kong F&B Industry ?

By HK Lawyer AJ Halkes Barrister-at-Law

Good Day Coffee Co - G/F #23A Shing Mun New Village Kam Tin is making more than coffee

Every day the new coffee shop springs up, but as soon as that has happened, another one closes down. The idea that a fancy coffee machine, a few cute chairs and enthusiastic staff can always lead to a profitable, food and beverage business, is a myth.

There have been a number of operators, over the years, who perfected the concept and who now enjoy a reasonable position in the marketplace. However, endlessly opening small hideaway coffee outlets in high proximity means more choice for the same customers, and that is not going to change soon.

Common Ground – 19 Shing Wong St

During the pandemic, because of the relative lack of restrictions on coffee shops, plus their proximity to those working from home and few other F&B business options, a large number emerged. Some financed by optimistic parents, looking for things for their children to do after college or by enthusiastic amateurs, who believed determination and a good “friends” group or social media profile, meant a viable business would follow. Now that there’s oversupply in many areas some F&B businesses are reporting sales at only a half, or even as much as one third, of what they were during the pandemic years; which even look like a bit like a boom time in retrospect. At that time Hong Kong had found itself with a captive population, who couldn’t go to restaurants and many of which simply closed their doors.

The limited cost of setting up one of these outlets, if its small, overlaid with a high dose of enthusiasm and cheap rentals has led people to believe that the profit margins on coffee, being what they are, will be enough. But as any Starbucks, Pacific Coffee or other operator will tell you, it’s a volume game : and these aren’t being opened in high traffic locations.

Kachimushi – 77 Kam Tin Rd

One interesting area is the New Territories of Hong Kong and the emergence of some enthusiastic offerings, in what traditionally would be seen as a much more “local” area. The northern village of Kam Tin now has at least three new style coffee shops operating. All operating in direct competition with traditional Chinese tea shops and bakeries; it will be interesting to see which last after lease renewals come due.

During the pandemic, when “local tourism” was a booming business itself there were numerous city dwellers venturing out into the new territories every weekend; Kam Tin even had local tour groups visiting, complete with flag-waving tour leaders.

That’s not happening now; the population is venturing further into Shenzhen or Zhuhai, in search of something interesting and has now bypassed the New Territories as viable weekend getaway or place to explore on a day-trip.

Just selling coffee alone, won’t cut it either on the practical side however, there are some angles.

Shing Fat Bakery – 215a Kam Tin Rd : a classic local bakery in the true Hong Kong Heritage sense

The latest to open in Kam Tin is an enthusiastically operated coffee shop which integrates modern bakery products for an amazing selection of fresh cakes, which moves it into a more competitive position. And just to prove that the existing traditional village shops will survive; literally across the road there is the classic Shing Fat Bakery; renowned for all the traditional product offerings, such as egg tarts, pineapple buns, sweet cones but if it’s a blueberry muffin or slice of banana cake the Good Day Coffee Co; would be to your liking.

Good Day Coffee Co – G/F #23A Shing Mun New Village Kam Tin

Good coffee alone won’t save anyone and it’s not a path to success; but freshen it up with some quality cakes, homemade flair, modern styling and a welcoming smile; then it might work to save at least a modest slice of the F&B industry in Hong Kong.

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