Hong Kong’s restaurant sector is experiencing a peculiar dynamic this Lunar New Year: rising bookings are failing to translate into increased earnings. Despite a 10 percent year-on-year increase in reservations for reunion dinners – a traditionally lucrative period – restaurateurs are reporting flat or even declining profits, citing a weak economy and a shift towards more affordable dining options.
Lee Kwong-hoi, CEO of Star Seafood Restaurant Group, which operates 14 restaurants across Hong Kong, encapsulated the situation. “We did not dare raise prices as the economy still seems somewhat weak,” he said, noting that menu prices for reunion dinners remain largely unchanged from last year, hovering between HK$3,000 (US$383) and HK$4,000 for a table of 12. While bookings are full from Friday to Monday, some branches are operating two dinner services per evening to accommodate demand, a practice dependent on local competition.
The disconnect between bookings and bottom lines highlights a broader trend of cautious consumer spending. While families are still prioritizing the tradition of reunion dinners – often enjoyed by extended family members on Lunar New Year’s Eve and increasingly by companies for staff – they are doing so with a greater emphasis on value. This is reflected in the preference for less expensive menu choices and a reluctance to accept price increases.
The situation is further complicated by a significant drop in demand for “poon choi,” a traditional Cantonese casserole dish commonly enjoyed at home during Lunar New Year. Star Seafood Restaurant Group reported a 60 percent decline in sales of this dish, suggesting a shift in celebratory dining habits. This could be attributed to rising ingredient costs, making home-prepared or more affordable restaurant options more attractive.
The broader economic context in Hong Kong is crucial to understanding these trends. The region has been grappling with economic headwinds, including global uncertainty and the lingering effects of previous economic shocks. This has led to increased consumer caution and a greater sensitivity to price increases. The fact that restaurants are hesitant to raise prices, even with increased bookings, underscores the fragility of the current economic environment.
Beyond Hong Kong, the trend of cautious spending appears to be influencing dining habits across the region. Reports indicate a potential impact on dining reservations due to increased outbound travel from mainland China. This suggests that some consumers who might have traditionally celebrated Lunar New Year with a restaurant meal are now opting to travel instead, diverting spending away from the hospitality sector. A report from , in the South China Morning Post, noted that the industry is bracing for “旺丁不旺财” – “busy but not profitable” – conditions.
However, the picture isn’t entirely bleak. Some restaurants are seeing a boost in bookings from mainland Chinese tourists, partially offsetting the impact of outbound travel. A separate report indicated that Haidilao, a popular hot pot chain, has seen reservations for Lunar New Year Eve exceed 50,000 tables nationwide, with new stores and dining experiences attracting customers. This suggests that certain segments of the market are still performing well, particularly those catering to tourists and offering novel dining experiences.
The agricultural sector is also experiencing some positive effects. A report highlighted the tradition of incorporating salmon into Lunar New Year meals as a symbol of abundance (“有餘”), and indicated that rising ingredient costs haven’t deterred consumers from enjoying this tradition. This suggests that while consumers are price-sensitive, they are still willing to spend on items considered essential to the Lunar New Year celebration.
Looking ahead, the restaurant industry in Hong Kong faces a challenging period. The combination of a weak economy, cautious consumer spending, and shifting dining habits will likely continue to put pressure on profits. Restaurants will need to adapt by offering more affordable menu options, focusing on value, and catering to the evolving preferences of their customers. The success of this Lunar New Year period serves as a bellwether for the broader economic outlook in Hong Kong, signaling a need for resilience and innovation in the face of ongoing economic uncertainty.
The situation also underscores the importance of understanding regional nuances in consumer behavior. While restaurants in major cities like Hong Kong and other cosmopolitan centers are remaining open, smaller, family-run establishments, particularly in rural areas, may be closing temporarily to allow staff to return home for the holidays. This highlights the cultural significance of Lunar New Year as a time for family reunions and the impact of this tradition on business operations.
