Restaurants bank on first Lunar New Year in 3 years without Covid curbs

Restaurants in mainland China and Hong Kong are looking forward to a bounce in business this Lunar New Year holiday, with customers being able to enjoy the festive season without any dine-in restrictions for the first time in three years.

Restaurants in mainland China and Hong Kong are looking forward to a bounce in business this Lunar New Year holiday, with customers being able to enjoy the festive season without any dine-in restrictions for the first time in three years.

Business picked up over the Christmas and New Year holiday for eateries in Hong Kong, raising hopes that activity would soon be nearing pre-pandemic days, said Herbie Ho Fung, the co-founder of Isshin Group. The company operates Japanese restaurants and retailers across Hong Kong Island.

“[With the addition of tourists] to the customer mix, we believe, business this year will definitely be better than last year,” Ho said.

Hongkongers spent about HK$103 million (US$13 million) on dine-in, takeaway and food-delivery services last year, a 14.4 per cent increase from the year before, according to market research firm Euromonitor International. Euromonitor expects this figure to surge to HK$120 million in 2023, with dine-in being the most popular food service – it is forecast to rise from 61 per cent in 2022 to 70 per cent this year.

During the strictest lockdowns, many restaurants ran at a loss, while peak infection periods forced some operators to close entirely due to lack of staff. Ho said the company ran at a revenue loss of 20 to 30 per cent during the most difficult periods.

Before the coronavirus pandemic struck, Hongkongers spent HK$121 million on food services. This figure plummeted to HK$79 million in the first year of the outbreak. Dine-in saw the sharpest drop off, with its value dipping by more than half in 2020.

Business will not return to pre-pandemic days until at least this summer, as it will take time to get back into the swing of things, Ho said. “Considering the effects of inflation on rent, manpower and cost of supplies, we are conservative about seeing high profit in 2023,” he added.

Reopening of the border with mainland China will bring only gradual growth to the sector rather than a sudden boost in business, Ho said. More than 60,000 mainland visitors came to Hong Kong in the first two weeks after the land border opened on January 8.

Hong Kong’s retail businesses may also remain muted for some time, as travellers from the mainland head to other destinations. “Most mainlanders were away from their hometowns for two to three years during the pandemic, and Hong Kong is not their top destination,” said Herbert Yum, research manager at Euromonitor. “People are eager to go back home to visit friends and family.”

Hong Kong consumers too are eager to escape to places such as Japan, Thailand, Taiwan and South Korea, said Yum, hence domestic consumption during the Lunar New Year holiday is anticipated to be low.

Another headwind for the sector will be recruitment, an issue that was exacerbated during Covid-19, as monthly bonuses became smaller during difficult periods where profits dropped.

“The younger generation consider [food and beverage sector] work to be tough, and the work hours are long,” said Ho, an industry veteran of 35 years.

Many workers had shifted from small and medium businesses to bigger companies or different sectors entirely, said Simon Wong Ka-wo of the Hong Kong Federation of Restaurants and Related Trades. “Before Covid-19, we had a minimum of 260,000 members from the catering industry working on the frontline. Now we only have about 200,000.”

Small and medium enterprises cannot offer the same pay as larger companies that ultimately retain employees. However, Wong was positive that the year ahead would see some improvements.

“We all look forward to a better year in 2023,” Wong said. “We have already been seeing business recover a bit, and we expect that it will continue to flourish.”

In Beijing, meanwhile, restaurants are gearing up for a busy week ahead. Diners have been booked out and holiday set-menu orders have been created, including takeaway sets for consumers who are still concerned about the spread of Covid-19.

Sheng Yong Xing, a roast duck restaurant in the Sanlitun commercial district, is charging 8,000 yuan (US$1,179) for a private room for 10 people, a steep price that has not deterred some diners.

“All seats were booked on Saturday, and only lunch was available for walk-ins,” said a receptionist surnamed Yang. The receptionists at locally popular restaurants Tao Tao Ju and Country Kitchen also said they were fully booked over the Lunar New Year period.

Tao Tao Ju sells poon choi, which can be ordered for takeaway for 759 yuan and can feed a family of eight. Dadong Roast Duck, a local favourite, is even offering catering at home. Its Peking duck set goes for 268 yuan and its pastries cost 468 yuan.

Dine-in services in Beijing resumed only last month. “I hope my business will recover as soon as possible after the new policy,” said Rabiul Baksh, owner and head chef of Dastaan, an Indian restaurant in Sanlitun. “I believe that business in Beijing will be back to normal soon.”