For the past 20 years, since Soho started to take off as a venue for restaurants, the area has seen constant growth – until now. For the first time since the handover, more restaurants are closing than opening in the area.
High rents play a part, of course, but so does the death of the parachute expat – the overseas professionals, usually 25 to 40, who used to come and live in Hong Kong for a couple of years, most likely in Mid-Levels, and eat out all the time. In the late 90s, when small independent restaurant groups in Hong Kong started to serve reliably good food outside five-star hotels for the first time, there were plenty of these big-spending customers around. These days most of them have gone, their jobs reassigned either to local people or to long-term expats – people with roots in the city, and often families, who don’t eat out so much, and are less likely to regard Soho, or Central in general, as an easily accessible dining destination. Along with the increasing number of remote workers, it adds up to a steep decline in spending.
Against that backdrop, you can see why Soho’s starting to struggle. The restaurant market is over-saturated, rents keep going up, the glass ceiling on what you can charge remains in place, and the customer base is dwindling. And it’s not just Soho that’s over-saturated: the headlong rush into Kennedy Town and Sai Ying Pun over the past few years has resulted in several outlets there closing recently too.
So you need to be a little more creative about your choice of location. Most people want to eat close to where they live – and more than half of Hong Kong’s population lives in New Territories new towns. So it’s not surprising that a lot of these areas are doing well, in particular the likes of Sha Tin, Tseung Kwan O and Tung Chung. It’s a huge shift in the market, but it shouldn’t really be a surprise. Before now Hong Kong has been an anomaly; no other major world city has so many of its fine-dining options squeezed into one small district.
Restaurant operators in these areas need to adopt a different set of expectations. Rents are lower, and people have more choices at better prices, so you can be successful charging much less. Don’t expect to make such a large percentage of your revenue at dinner, and figure on drinks being a very minor contributor: maybe about 10 per cent of the total.
But most of all, be inventive. The millennial generation in particular are looking for a hideaway, somewhere they find out about by word of mouth that they feel is their discovery, and where the proprietor is on premises. The byword is authenticity: people want to feel that personal touch. In other words, don’t just copy and paste concepts or bring in yet another overseas franchise; come up with something original, because the geographical spread of Hong Kong F&B provides plenty of opportunities.
Ivan – 28/01/2018
IWP Limited 