In this Dec 24, 2020 photo, a worker closes a bar due to COVID-19 coronavirus restrictions on Christmas eve in Hong Kong. (ISAAC LAWRENCE / AFP)
COVID-hit restaurants in Hong Kong are unlikely to return to pre-pandemic level this year despite the vaccine rollout, overshadowed by social distancing measures and indefinitely closed borders with the outside world, DBS said on Tuesday.
Bar business revenue declined 46% year-on-year in the fourth quarter of 2020, followed by Chinese restaurants, down 35%
Alice Hui, a Hong Kong and mainland China consumer sector analyst with DBS Bank Hong Kong, told a news conference that Hong Kong’s catering business relies heavily on travelers, and the sector’s ability to register a positive performance depends on when borders reopen.
Restaurant sales in Hong Kong have bottomed out since the second half of 2019 and will turn positive this year off a low base, Hui said. However, as it’s unlikely that the deficit-troubled SAR government will offer further subsidies to the sector, more restaurants may close, she said.
The catering sector has been heavily affected by social gathering restrictions, DBS said. According to the bank’s research, Hong Kong restaurant sales declined 29 percent to HK$79.4 billion (US$10.2 billion) in 2020, suffering a HK$33 billion slump in revenue.
Many iconic Hong Kong restaurants closed in 2020. These included traditional “yum cha” restaurant Lin Heung Kui in Sheung Wan, and the Jumbo Floating Restaurant in Aberdeen.
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Bar business revenue declined 46 percent year-on-year in the fourth quarter of 2020, followed by Chinese restaurants, down 35 percent, non-Chinese restaurants lost 20 percent, and fast-food restaurants dropped 15 percent.
It’s a tale of two worlds on the Chinese mainland – catering businesses are expected to return to pre-pandemic level in mid-2021, and it could be as fast as in the first quarter for some restaurants, Hui predicted.
Despite stringent restrictions on cross-province travel during the Spring Festival, Hui said that mainland restaurants performed well during the Lunar New Year holidays, under a controlled pandemic situation and policies to encourage people to stay put for the celebration.
According to China’s Ministry of Commerce, the country’s key retail and catering restaurant sales rose 29 percent year-on-year during the seven-day Spring Festival break, 4.9 percent higher than the 2019 level.
With the introduction of holiday set menus, delivery sales rose 70 percent, with Beijing, Shanghai, Shenzhen, Guangzhou, and Chongqing comprising the top 5 markets nationally, Hui said.
Hui forecast that Hong Kong-listed Yum China and the hot pot leader Haidilao will lead the recovery. Deliveries form an important part of Yum China’s catering business, while Haidilao recorded a profit in the second half of 2020, she noted.