We all read about the high prices that landlords charge their tenants in Hong Kong these days. Walk up Nathan Road and every shop is either a jewelry chain or luxury goods concept targeting Mainland Chinese tourists. Independent local concepts are dying off quickly in all phases of retail and it seems only the local and overseas big chains can survive in this environment.  Restaurant menu prices are rising quickly and portion sizes shrinking while the quality of the ingredients used is deteriorating. .  Restaurant owners are using every trick up their sleeve to keep cost of sales down and other expenses low since rent costs are non-controllable. Visit one of the leading Hong Kong tea halls ( Cha Chaan Teng)  and you are treated to a high carb/low protein lunch at a small table you are sharing with 4 other people.  If you linger too long you are asked to leave.  One leading restaurateur recently remarked that in Hong Kong, “diners are just eating rent not food!” Another mentioned that “It is a war out there! We are just slaves to property owners. As soon as you start making money they will raise your rent upon renewal!”

So why do people still want to operate restaurants in Hong Kong?  Are they just crazy or do they know something I don’t? Personally I think they are a little crazy but I do understand their motivations.  First, many just love the business and would not know what to do if they closed down the shop, so they just persevere.  Second, restaurants still are a sexy category and many people want to be associated with them, especially financial service professionals looking for fun investments.  Finally, opening a restaurant is a very emotional decision and sometimes logic goes out the window.

There are some concepts making big money in Hong Kong of course but for the majority of independent operators it is an extremely stressful business with low returns, and some owners go to ridiculous levels to earn some cash.  I was recently in a Cantonese restaurant in Tsim Sha Tsui with friends and discovered that the steamed chicken we were eating was basically all skin and bone.  When i complained the Manager answered that it was impossible to serve much meat with such a high rent!

Home cooked meals are looking better every day!!

 


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