Mainland F&B Strategies in the Hong Kong Market: The Successes and Failures (AI Translation)
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文｜财新周刊 文思敏 发自香港
By Sisi Wen, Caixin Weekly, reporting from Hong Kong
从尖沙咀地铁站出来走上50米，就能见到霸王茶姬巨大的蓝色中国风围挡，这家内地网红茶饮品牌即将于2024年9月登陆中国香港。在招聘网站上，霸王茶姬以最高9万港元的薪资招聘办事处负责人，显示其在香港市场大展拳脚的野心。
Exiting the Tsim Sha Tsui MTR station and walking 50 meters, you will see the large blue Chinese-style hoarding of Bawang Chaji. This mainland internet-famous tea brand is set to land in Hong Kong, China, in September 2024. On recruitment websites, Bawang Chaji is offering a salary of up to HKD 90,000 for an office head, showcasing its ambitions to make a significant impact in the Hong Kong market.
The first store of Bawang Chaji was strategically located in the trendy and youth-favored K11 Art Mall. However, in the same shopping center, several other mainland tea beverage brands such as Nayuki, Hey Tea, and Lin Xiangning had already established their presence, indicating that future competition in the industry is bound to be fierce.
自2023年以来，香港市场已经陆续迎来猫抓烤肉、西塔老太太、流口水重庆面馆、太二酸菜鱼、和府捞面、木屋烧烤等诸多内地知名连锁餐饮品牌。大多数选择在香港最核心的商圈旺角、尖沙咀、铜锣湾“插旗”，和府捞面甚至以30万港元的月租在曾经的“全球最贵街道”罗素街占据一席之地。这些品牌采取直营或区域代理的方式，在港扩张速度亦十分惊人，2023年9月进军香港的湘菜馆农耕记，在短短十个月内已经开出六家分店。
Since 2023, the Hong Kong market has witnessed the arrival of numerous well-known mainland Chinese restaurant chains, including Cat Claw BBQ, Xita Granny, Drool-worthy Chongqing Noodle House, Tai Er Sauerkraut Fish, Hefu Noodles, and Mu Wu Barbecue. Most of these brands have chosen to establish their presence in Hong Kong's most central business districts, such as Mong Kok, Tsim Sha Tsui, and Causeway Bay. Hefu Noodles, in particular, has secured a spot on the former "world's most expensive street," Russell Street, with a monthly rent of HKD 300,000. These brands are expanding rapidly in Hong Kong through direct operations or regional franchises. For instance, the Hunan cuisine restaurant, Nong Geng Ji, which entered the Hong Kong market in September 2023, has already opened six outlets within just ten months.
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- Mainland food and beverage brands are rapidly expanding into Hong Kong, facing fierce competition while local restaurants struggle with high rents and labor shortages.
- Bawang Chaji will debut in September 2024, offering up to HKD 90,000 for key roles, indicating high ambitions.
- Brands like Tai Er and Lin Xiang Ning leverage both cultural appeal and strategic localization to cater to Hong Kong’s market dynamics, despite higher operational costs.
Bawang Chaji, a prominent mainland tea brand, will debut in Hong Kong, China, in September 2024, with ambitions indicated by offering office head salaries up to HKD 90,000. The brand will compete with other mainland tea brands like Nayuki, Hey Tea, and Lin Xiangning in the K11 Art Mall [para. 1][para. 2].
The influx of mainland Chinese restaurant chains and catering brands in Hong Kong, starting in 2023, includes names like Cat Claw BBQ, Drool-worthy Chongqing Noodle House, and Tai Er Sauerkraut Fish, focusing on central business districts. Hefu Noodles notably pays HKD 300,000 per month in rent on Russell Street [para. 3].
Local Hong Kong dining establishments face closure due to high rents and lack of successors, as seen with Shanghai Lao Lao, set to close four branches. In contrast, mainland brands have rapidly expanded, with Nong Geng Ji opening six outlets in ten months [para. 4][para. 5].
Hong Kong, with its higher dining costs compared to mainland China, saw mainland brands struggling to localize previously. Claire, from The Florist, shared personal experiences of new business models merging dining with floristry, showcasing success and rapid establishment in Hong Kong, despite initial hesitation [para. 6][para. 7].
Mainland brands like Haidilao, Heytea, and Nayuki, previously cautious in their Hong Kong expansion, established a limited number of outlets pre-COVID-19. This abrupt halt was mainly due to pandemic-induced restrictions [para. 8][para. 9].
The post-pandemic era sees renewed interest from brands like Tai Er Sauerkraut Fish, which opened four branches simultaneously in Hong Kong in December 2023. Despite logistical and recruitment challenges, malls eagerly vying for new inflows of consumer traffic have made favorable offers [para. 10][para. 11][para. 12].
The surge of mainland brands in Hong Kong’s catering scene involves adapting to Hong Kong’s specific market conditions while learning from past failures. Some brands, like Luobo Xiangnan and LMM Lemonade, struggled with high rents and competition, leading to closures in less than a year [para. 13][para. 14][para. 15].
Successful adaptations require a balance of cost management and maintaining brand consistency. HUA Kitchen, for instance, sees the entry into Hong Kong as a step towards international expansion, leveraging Hong Kong’s global exposure while dealing with distinct local operational challenges [para. 16][para. 17][para. 18].
Labour shortages and high recruitment costs plague the post-pandemic Hong Kong restaurant industry. The higher service standards and staffing ratios of mainland brands, such as Tai Er Sauerkraut Fish, underline the significant labour cost challenges [para. 19][para. 20].
Even industry veterans like Nelson observe that traditional local eateries face transformation pressures amid changing consumer preferences, with younger demographics favoring stylish, social media-friendly dining experiences. Robotic systems and automation in operations provide new avenues to manage high costs and improve profitability [para. 21][para. 22][para. 23][para. 24][para. 25].
Nelson, a seasoned restaurateur, highlights the necessity of adapting to evolving consumer habits and the role of exceptional service and quality in retaining customers amidst competitive pressures. This new wave of mainland brands is seen as revitalizing Hong Kong’s dining industry, catering to the changing tastes of the local population and visitors alike [para. 26][para. 27].
- Overlord Tea Ji
霸王茶姬 - Overlord Tea Ji, a popular mainland Chinese tea brand, plans to open its first store in Hong Kong's trendy K11 Art Mall in September 2024. The brand is currently hiring an office head with a salary up to HKD 90,000, showcasing its ambition to expand in the Hong Kong market.
- Nayuki's Tea
奈雪的茶 - Nayuki's Tea opened its first Hong Kong store at The Peak in 2019. Despite being a popular mainland brand, it has maintained a conservative expansion in Hong Kong, with only six stores to date. Economic and operational challenges, heightened by the COVID-19 pandemic, have influenced its cautious growth strategy in the region.
- HEYTEA
喜茶 - HEYTEA is an interior tea brand that entered the Hong Kong market in late 2018, opening its first branch at the New Town Plaza in Sha Tin. Despite its widespread presence in mainland China, with numerous outlets, HEYTEA's expansion in Hong Kong has been conservative, maintaining only six branches as of the article's publication.
- Forest and Lemon
林香柠 - Forest and Lemon (林香柠) is a Guangdong-originated lemon tea brand with around 400 stores in mainland China. Post-Hong Kong-mainland border reopening, it expanded rapidly in Hong Kong, opening 11 stores in key commercial areas. Managed by Hong Kong-based agents, the brand has a localized menu and products, with key ingredients supplied from China and other materials sourced locally.
- Cat Scratch BBQ
猫抓烤肉 - Cat Scratch BBQ is one of several well-known mainland Chinese restaurant chains that entered the Hong Kong market since 2023. Many such brands have set up shop in key commercial districts like Mong Kok, Tsim Sha Tsui, and Causeway Bay.
- Grandma Xita
西塔老太太 - Grandma Xita, an internet-famous barbecue brand from mainland China, faced challenges in Hong Kong. The first store, located in Tsim Sha Tsui East, struggled due to high rental costs and low foot traffic. The brand offers significant discounts to attract customers, and plans to open a new, larger outlet in a more favorable location in Tseung Kwan O.
- Drooling Chongqing Noodle House
流口水重庆面馆 - Drooling Chongqing Noodle House is a well-known Chinese mainland chain that expanded into Hong Kong's core shopping districts like Mong Kok, Tsim Sha Tsui, and Causeway Bay. It is among several brands that quickly captured the Hong Kong market. The brand signifies the broader trend of mainland Chinese food enterprises entering Hong Kong, adding to the city's dynamic culinary scene.
- Tai Er Sauerkraut Fish
太二酸菜鱼 - Tai Er Sauerkraut Fish, a brand under the Jiumaojiu Group, expanded aggressively in Hong Kong, opening four branches sequentially in December 2023. The expansion in Hong Kong, delayed due to COVID-19, was driven by strong demand from Hong Kong customers frequenting stores in Shenzhen. The brand faced significant challenges regarding hiring and training a large number of employees. Despite high costs, it maintained consistent service standards across locations.
- He Fu Noodle House
和府捞面 - He Fu Noodle House is a well-known mainland Chinese restaurant chain that has expanded into the Hong Kong market. It notably secured a place on Russell Street, once the world's most expensive street, with a monthly rent of HKD 300,000. The brand has rapidly expanded, reflecting the broader trend of mainland restaurant chains establishing a presence in Hong Kong's core commercial areas.
- Wood House BBQ
木屋烧烤 - Wood House BBQ opened its first Hong Kong store in June 2023 but faced challenges, including three food poisoning incidents within three months. The incidents involved eight diners who experienced symptoms such as vomiting, diarrhea, and fever after consuming grilled oysters and lamb skewers, potentially due to norovirus or salmonella.
- Nong Geng Ji
农耕记 - Nong Geng Ji, a mainland Chinese restaurant specializing in Hunan cuisine, expanded rapidly in Hong Kong after entering the market in September 2023. Within just ten months, the restaurant opened six branches, showcasing its aggressive expansion strategy amidst fierce competition from other mainland and local brands.
- Hua's Kitchen
花厨 - Hua's Kitchen is a trendy Mainland Chinese restaurant that opened its first Hong Kong branch in Causeway Bay. Known for combining floral art with dining, it has gained popularity with unique offerings like personalized birthday flower boxes and intricate decor. The Hong Kong location quickly achieved break-even within its first month and ranks high in revenue and profit within the group.
- Haidilao Hotpot
海底捞 - Haidilao Hotpot opened its first Hong Kong store in Mong Kok in 2017. As of this article, it has expanded to five branches in Hong Kong. Despite its vast presence in mainland China, Haidilao's expansion in Hong Kong remains relatively conservative.
- LMM Lemon Fragrance Handmade Tea
LMM柠濛濛手打香水柠檬茶 - LMM Lemon Fragrance Handmade Tea, originating from Guangdong Zhanjiang, has swiftly expanded in Hong Kong since opening its first store in June 2023. With 11 locations in prime areas like Tsim Sha Tsui and Central, it serves over a thousand cups daily. The brand tailors its menu and product offerings to local tastes, featuring unique items not available in mainland stores.
- Radish Southbound
萝卜向南 - Radish Southbound, a Hunan cuisine restaurant specializing in iron-plate fried rice and pickled vegetables, opened in Hong Kong’s crowded Mong Kok area but closed after just four months. Its pricing, nearly double that of its mainland shops but not higher than local competitors, and high rent contributed to its brief stint.
- Before 2023：
- Several mainland brands such as Haidilao (first flagship store in Mong Kok in 2017) tested the waters in Hong Kong.
- End of 2018：
- Heytea's first Hong Kong outlet opened in Shatin's New Town Plaza.
- 2019：
- Nayuki set up its first Hong Kong store on The Peak.
- 2020：
- Since the outbreak of the COVID-19 pandemic, Hong Kong's catering businesses faced numerous pandemic-related restrictions.
- Early 2023：
- Sun Hung Kai Properties invited HUA Kitchen to open a branch in World Trade Center, Causeway Bay.
- September 2023：
- Nong Geng Ji entered the Hong Kong market.
- December 2023：
- Tai Er Sauerkraut Fish opened four new branches concurrently in Hong Kong.
- July 2024：
- Shanghai Lao Lao is set to close four branches.
- By May 2024：
- After observing performance improvements under a new mainland-trained manager.
- July 6, 2024：
- Caixin arrived at Xi Ta Laotai store at 5:30 p.m. to find it fully occupied with waiting customers.
- After the pandemic control policies ended and the full reopening between Hong Kong and mainland China：
- Tai Er Pickled Fish reconsidered its plans for Hong Kong.
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