Why invest in Hong Kong food and beverage right now .. and perhaps why not .. Part 1 of 3
By HK Lawyer AJ Halkes Barrister-at-Law
I’ve seen people invest because they enjoy eating and drinking, loved a restaurant, wanted to back a chef to go solo, or got taken by a fancy spreadsheet, some just for the buzz.
All reasons to write a cheque; people buy sports cars, art and shares in private businesses as they enjoy what those businesses create; food, fashion, or something less sexy.
But f&b “investment” is a leap of faith on someone’s ability to turn passion into performance (plus profit) and a skill (often cooking in this case) into a sustainable business.
I’ve seen great success stories among my clients. Who can forget the dynamic chef & barman duo at Eclipse who took over an old run-down Chinese restaurant, morphing it into a lively Thai outlet with a cheap lick of paint, new table covers and a few photos. These “makeover” opportunities are around in Hong Kong, affordable leases, capex is low, and it’s been a great time to grab a site that’s fully equipped; this is when it is a good time to get in, but some of the best deals may have already gone to savvy operators.
That duo expanded the McSorley’s chain and built the iconic Coyote in Wan Chai. Scaling through energy, creativity, and relentless adaptability. If a concept didn’t succeed, they reworked it, changed tack and kept moving forward. They built a group with many shareholders. Some did well, others less so, depending on which outlets they backed. But most enjoyed being part of the business. They took pride in calling a restaurant their own and being part of something larger. The Igor’s group was similar in style and scaling as were a good few others.
That’s reason number one to invest in F&B. Find guys you like, be involved because you want to be, enjoy the people, the energy, the journey and the excitement of being part of something meaningful and dynamic.
An F&B investment offers far more satisfaction than betting on a horse at Happy Valley or watching a boring stock tick up and down each morning; people do get off on that I know, each to his own.
And remember, even a thriving, profitable F&B business is not a liquid one. It can be difficult to find a buyer if you want to sell your shares, so your return depends on ongoing profits rather than resale value, and in a few years or months, it won’t be the new hot go-to place. But more of that next.
In part 2, I’ll explore more of why you might not want to invest in a food and beverage business in Hong Kong and tell a couple of disaster tales.
If you need specific input regarding a strategic Hong Kong challenge or related legal matters in the HKSAR, you can always DM me and check out my profile at https://www.ajhalkes.com
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