Hong Kong restaurant chains Fulum, Tao Heung, Tsui Wah close outlets, cut timings in bid to contain coronavirus
- As listed restaurant chains follow government measures to control the Covid-19 outbreak, it will only put further pressure on their bottom lines and dampen retail spending
- The combined pressure from last year’s social unrest and China’s slowing economy affected the earnings of some of the listed restaurant chains last year
Fulum Group, one of Hong Kong’s largest restaurant chains, has joined other listed catering groups in suspending dinner service and shutting eateries temporarily in response to the government’s latest measures to control the spread of coronavirus.
“The group will make assessment on the coronavirus outbreak in determining the reopening,” chairman and chief executive Yeung Wai said on Sunday. Fulum said it would temporarily shut four of its restaurants and suspend evening operations at another eight for 14 days.
Tao Heung Holdings, which operates 48 restaurants in the city, said it would also suspend dinner service across all its restaurants for two weeks. Tsui Wah Holdings, which operates over 20 restaurants in Hong Kong, said it would bring forward its closing time from 11pm to 8pm from Sunday.
The steps taken by Fulum, Tao Heung and Tsui Wah are expected to put pressure on their flagging bottom lines and further dampen the city’s overall retail consumption appetite, already under strain from the anti-government protests during the second half of 2019.
Already in February, Fulum had suspended operations at about 20 restaurants after an employee was found to have contracted Covid-19. Some 2,000 employees had to take unpaid leave last month as fewer of its outlets were open, and the salaries of all its executive directors have been halved.
Even Tsui Wah told the stock exchange last month that because of the economic challenges posed by the epidemic it would cut salaries for senior management and board members by 30 per cent for up to three months.
“Based on the current situation, it is expected that [the impact] from the coronavirus on the second quarter would still be very tough … It appears to be a certain outcome that the global economy will contract during the first half this year,” he wrote in his blog post.
Chan said that he expects Hong Kong’s retail sales figures for February, which will be announced on Tuesday, to “continue to show drastic decline”.
In January, these numbers had already plunged by 21.4 per cent year on year to HK$37.8 billion (US$4.8 billion), resulting from a steep drop in mainland tourists because of the coronavirus outbreak.
The combined pressure from last year’s social unrest and China’s slowing economy has affected the results of some of the listed restaurant chains last year.
Tai Hing Group, which operates over 200 restaurants in Hong Kong, China, Taiwan and Macau, last Thursday reported a 75 per cent plunge in profit in 2019. Its full year net profit attributable to shareholders fell to HK$76.9 million from HK$304.9 million a year ago.
“The outbreak of the novel coronavirus, coupled with the local social incidents in Hong Kong and slowdown of growth in the Chinese economy … [means that] a further deterioration of the food and beverage sector can be expected,” it said in its results announcement.
In February, the Census and Statistics Department said that total receipts of the city’s restaurants sector for 2019 was provisionally estimated at HK$112.5 billion, down 5.9 per cent compared to 2018.
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