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Challenges of restaurants facing in HK

By lokwanyin Apr 28, 2014 908 Words
TOPIC: Challenges of Hong Kong Restaurants Facing Nowadays

INTRODUCTION:
It is well known that Hong Kong is a food paradise since there is an array of types of food and a wide range of restaurants can be founded in Hong Kong. The business of restaurants plays an important role in the food service sector in Hong Kong and it is gaining momentum due to the variety kinds of food provided. However, due to the cost, labor and competition factors, Hong Kong restaurants are facing challenges both internally and externally, and as a consequence, they are opening and closing at a fast pace. (Chung,2013)

CHALLENGE 1:
First and foremost, one of the crucial challenges facing by Hong Kong restaurants is the soaring rent of their locations. Due to the increasing tension of the land use in Hong Kong, the land price is increasing and as a result, the rent is rising. The tremendous amount of property rental increased by the property owners adds a large financial burden on the restaurants. Since they cannot gain any profits if they need to pay such an expensive rent, therefore, they will have no choice but to close down their restaurants. The famous Lei Yuen Congee Noodles (Chung, 2013) behind Sogo Department Store in Causeway bay is a case in point. It was forced to close because it was located in the core area in Causeway Bay and the rent was doubled. This case shows that the insurmountable rent may lead to an end of a restaurant business. Besides, the food cost is another challenges to Hong Kong restaurants. Due to the inflation, the cost of ingredients is increasing. Some commodities like vegetables, cooking oil, cheese and beef are costing higher, restaurants need to pay more and the profit is lower (Ryan, 2011). Some restaurants had tried not to increase the price od their dishes and make less profit they could get in order not to scare off their patrons initially, however, with the steady rise of food cost, they were not be able to impede the increase of their menu prices. Undoubtedly, the increase in the price of menus resulted in a loss of customers.

CHALLENGE 2:
Moreover, labor shortage is also a key challenge of Hong Kong restaurants. (Wong, 2011) Because of the long working hours and tough work, many people are not willing to work in a restaurant, except those are passionate about food and beverage. With fewer newcomers in this industry, there is a lack of skillful staff. Although there is an implementation of minimum wage law in order to prevent workers from depriving, many people will prefer exploring in other industries rather that working in restaurants, especially the Generation Y who born in the 1980s and 1990s. McDonald's Restaurants (Hong Kong) Limited is a case in point (Wong, 2011). The Generation Y group of staff has become increasingly mobile after the imposition of minimum wage law. They would like to seek better opportunities in other areas instead of working for long hours in the food industry. Since there will be fewer passionate people in food and beverage among the youngsters, as a consequence, there may be a shortfall of restaurants workers after the retiring of the current talented staff. The service quality and operational efficiency may not be maintained with a shortage of labor. Therefore, restaurants are facing a tremendous difficulty in the aspect of labor use.

CHALLENGE 3:
Last but not least, there is a fierce competition among restaurants. In today’s highly customer-oriented marketplace, maintain increasing levels of food hygiene and service quality is certainly important. Restaurants need to ensure that the basic service is good and the menu should not be dull and it should include some special dishes regularly in order to attract customers. However, it is not the only requirement for maintain restaurants’ competitive edge. Becoming a successful restaurant, not only do the food and service are in a good quality, media attention is also needed. Most of the upscale restaurants in Hong Kong are aggressive in holding events or collaborating with other business partners to offer promotions and to attract media attention. They will also add leisure components to the dining experience, such as wine tasting sessions, cooking classes or food photography courses(HKQAA,2011). Many casual restaurants also take advantage of the social media platforms, for instance, OpenRice and Facebook, to promote themselves by offering discounts. It shows that the competition among restaurants is extremely fierce and media attention plays a key role in the competition of restaurants. If the restaurants cannot stand out to catch customers’ attention through media, the business may not be successful when they are comparing with other restaurants.

CONCLUSION:
To conclude, restaurants are facing many challenges in Hong Kong, ranging from internal challenges to external challenges. Although the monetary challenges, lack of labor and the fierce competition add a burden on running the restaurants business, there are always solutions to solve the problems. With the perfect service and tasty food provided, restaurants can succeed and always stand out from others.

REFERENCES:
Cathie Chung(2013),Attractiveness And Challenges Of Restaurant Business In Hong Kong (Website:http://www.joneslanglasalleblog.com/APResearch/retail-research/attractiveness-and-challenges-of-restaurant-business-in-hong-kong#.UmvxjRaA3X9)

HKQAA(2013),VISION (Website : http://www.hkqaa.org/cmsimg/1375072136vision48.pdf)

Nicolette Wong(2011),Challenges and incentives motivate young restaurant workers (Website http://cthr.ctgoodjobs.hk/article/show_article.aspx/1174-14129-challenges-and-incentives-motivate-young-restaurant-workers)

RYAN(2011),Can Restaurants Increase Their Menu Prices In Response To The Rising Food Cost? (Website: http://www.kng.com/blog/food-and-beverage-news/can-restaurants-increase-their-menu-prices-in-response-to-the-rising-food-cost/)

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