Industry experts weigh in on what’s causing the turbulence, from short-term leases to even shorter attention spans

Words: Katy Wong; Illustration: Adam Pointer

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Alicia Walker

Editor-in-Chief at Foodie magazine

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Yenn Wong

Owner and founder of JIA Group of restaurants

 

+852: How has Hong Kong’s food scene changed over the past decade?

Alicia Walker (AW) The evolution has been incredible – Spaghetti House used to be one of the few international options, but now there are so many different cuisines available. Trend-wise, people are craving Instagrammable food, and healthier and sustainable options.

Yenn Wong (YW) Technology is also changing rapidly – we’re racing to keep up! Our restaurants work with delivery services like Deliveroo, for instance, but we have to pay a big commission to be available on the platform. We are trying to incorporate technology more strategically, like with online reservation system SevenRooms – it helps minimise labour costs, as well as consolidate useful data, such as customers’ spending habits and reservation history.

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+852: What are the biggest challenges for restaurant owners? 

AW I hear all the time that rent is the biggest struggle. Most leases in the city are only two years long, which doesn’t give restaurants enough time to gain a steady clientele and turn a profit. Often, the landlord will raise rent after two years. The restaurants that tend to survive are those that can handle this.

YW Yeah, it comes to a point where the profit margins are too thin to run the business. For us, the rent increases every time we renew a lease, but we don’t necessarily see incremental revenue growth over time. A restaurant business cycle doesn’t work like that. So if you can’t sustain the business in the first two to three years, you will bleed to death. Normally, the first two years are when you set the foundation of the business.

AW Adding to that, I think having a great concept is essential. JIA Group’s 208 Duecento Otto, which opened almost a decade ago, is a classic example of knowing the market and having the foresight to open in Sheung Wan, an area that was less developed in terms of dining at the time.

 

+852: But then what happened with Rhoda? JIA opened the grill concept in 2016 in Sai Ying Pun to much fanfare, but it closed in 2018.

YW We thought Rhoda had the potential to go further as a business. Unfortunately, the location wasn’t ready for a smokehouse concept like Rhoda and we couldn’t sustain it long enough to wait for the area to mature. 208 Duecento Otto is a much more accessible concept – casual Italian – and we opened at the right time.

 

+852: What about long-standing eateries such as the Lin Heung Tea House, which doesn’t seem to be closing anymore?  

AW The news that Lin Heung was due to close was widely reported because it’s one of the few remaining trolley service dim sum restaurants and has nostalgic relevance for many. The attention has led to a surge of customers, which may have impacted the landlord’s decision to renew the restaurant’s lease.

YW I can’t comment on that situation specifically, but it’s also challenging for even long-established restaurants to keep up with the fast pace of today’s food scene. They must have a very strong customer base to maintain the business for so many years, but they also need to be proactive, reminding loyal customers that they are still here offering good food that we love.

AW On the other hand, I think the relationship with a landlord can make or break a restaurant, regardless of whether it’s a established or a new concept.

Lin Heung Cake Shop & Restaurant Hong Kong. Image shot 2007. Exact date unknown.

+852: What hand do media and bloggers play?

YW Everyone claims they are a foodie or KOL [key opinion leader] – they all want to be there when restaurants first open, but don’t really care afterwards. They post about a restaurant today, another tomorrow. Instead, we want everyday people to come to the restaurant, be impressed with our dishes and post on their social media accounts.

AW Different media platforms have different business models. Bloggers usually have different motivations – they tend to be trend-driven, which can result in a more fleeting impact.

YW But don’t underestimate the power of the media, especially the in-depth stories where restaurants can communicate their visions. While we try our best to communicate directly to our diners, the media helps spread the word.

 

+852: What do you foresee for the future?

YW I think there will be more celebrity chefs, chain restaurants and international brands coming to Hong Kong – this seems to be the trend. But the restaurants that are going to succeed are those that really do their homework and know what they are doing, from understanding the local market to having smart concepts, good pricing, great locations and impeccable execution.

AW Food trends in Hong Kong can change in an instant. It’s hard for independently owned restaurants to survive in the industry. Even chain restaurants or international imports don’t always work. You have to live and breathe it.