Deep-rooted problems

Having seen how his mainland peers have been racking their brains and trying out new ideas to beat cut-throat competition, Yeung calls it a "real mind blower" to the extent of making Hong Kong's caterers and restaurants, beset by deep-seated snags, hard to compete with.

A critical dearth of labor, plus skyrocketing operation costs, have plagued the industry for years, and local business operators may still lack the foresight, courage or ability to change and go forward.

"Among professions generally, catering is seen as tailor-made for low-skilled workers and not rewarding enough, so it has never been the top choice among job seekers. They tend to job hop to alternative work that is less tiring and which offers almost identical pay, such as security officers, especially with the statutory minimum wage regime having come into force more than decade ago," says Yeung who also chairs the Hong Kong Federation of Restaurants and Related Trades.

The COVID-19 pandemic exacerbated the situation. Between 2018 and 2022, the city's lower-skilled workforce decreased by about 160,000, or over 4 percent of the working population, according to Legislative Council data.

With an estimated manpower gap of 20 to 30 percent, the heavy workload for catering staff is partly to blame for the oft-criticized brusque service, says Tommy Cheung Yu-yan, a nonofficial member of Hong Kong's Executive Council and legislator representing the catering sector. As part of efforts to alleviate the labor crunch, the Enhanced Supplementary Labour Scheme was endorsed by the Executive Council in June last year, and has accepted applications since September 2023. By late August, the Labour Department had received 6,852 applications involving 61,343 external workers, with waiters, waitresses and junior cooks as the most preferred jobs. Up to 40 percent of the applications were given the nod, including 21,720 workers most of whom were in the catering, retail and hospitality businesses.

While importing labor may have helped to reshape the job market, Yeung notes the hard fact is that employers have to bear all the expenses incurred by hiring workers from outside Hong Kong, such as accommodation under a maximum two-year contract, as well as expenses arising from public holidays. The manpower headache may also be compounded by some local workers choosing to work part time as a stable income would disqualify them from public rental housing, according to Yeung. "Basically, catering jobs won't pay enough to compensate for the subsidies they may risk losing," he says. "So, why not just 'lie flat'?"

Describing public rental housing as something that is even harder to come by than winning a lottery, Yeung sees no shortage of workers adopting a "rather realistic mindset", prioritizing housing over employment regardless of the average five-and-a-half-year queue promised by the Housing Authority.

The graying population is another aggravating factor, albeit not unique to the catering business, that has expanded rapidly. The Census and Statistics Department revealed that in the second quarter of this year, the number of employees aged 40 and above in the retail, accommodation and catering sectors had far exceeded that in other age groups, reaching 320,300.

The average age of workers in the city's 18,000 catering establishments now stands at 45, according to Simon Wong Ka-wo, president of the Hong Kong Federation of Restaurants and Related Trades. Although the industry's middle-aged workforce should not be viewed as a "fallback solution", he believes it does offer a glimpse of the difficulties in hiring and retaining people.

Rising costs are another headache for the catering trade. Yeung estimates that rents take up as much as 15 to 20 percent of their revenues, with another 30 percent going to wages, without the costs of ingredients and utilities being taken into account.

However, there is comfort in Hong Kong's notoriously hefty commercial rents heading south since the middle of 2023. Data from the Rating and Valuation Department show average private rentals in August dropped by almost 4 percent from the previous year.

Over a longer time span, rents for shops have fallen by 60 percent since 2014, and 40 percent since 2019, according to Lawrence Wan Wan-keung, Hong Kong-based senior director of retail advisory and transaction services for US-based global real-estate advisory group CBRE.

But unlike retailers who stand to benefit from rent cuts under short-term leases, Chinese restaurateurs whose businesses are generally heavy-asset investments with upfront costs of up to HK$10 million ($1.28 million) are often required to sign six-year leases for the huge area required, and get little or no relief from rent cuts, says Yeung.