Alarm bells for Western restaurants as steakhouse shutting nine of 19 branches amid 'cost-effective deals' in Shenzhen

Ayra Wang

It is a doom and gloom warning for restaurants as another chain, Outback Steakhouse, plans to close nine of its 19 branches from August 5, affecting nearly 300 staff.

The US steakhouse said it will close branches in Tsuen Wan, Causeway Bay, Wan Chai, Tuen Mun, Kowloon Bay, Tseung Kwan O, Tsim Sha Tsui and Hung Hom after "carefully considering market conditions, operation costs and strategic direction of the company."

It added: "We remain committed to the Hong Kong market with our 10 branches and will continue to serve customers with the same commitment to quality and excellence that they have come to expect from the brand."

Established in Hong Kong 25 years ago, the Australian-style steakhouse opened its latest branch in April in Central. Its signature steaks are priced from HK$300 to HK$600, according to dining website OpenRice.

The company said assistance will be provided to 300 affected employees.

Its subsidiary, hamburger chain Aussie Grill, closed its two restaurants in December and said it was withdrawing from Hong Kong after four years.

Outback is not the only restaurant that took a hit.

Hong Kong-style chain Kam Kee Cafe closed seven of its 38 branches this year, while Japanese beef rice chain Katoya shut down its remaining three in March after eight years of operation.

But Hong Kong Federation of Restaurants and Related Trades president Simon Wong Ka-wo said Western eateries are feeling more pressure amid the rising trend of cross-border spending among Hongkongers.

"Their main customers - youngsters and families - go to Shenzhen on weekends and holidays to have steak, which is much more cost-effective than dining in Hong Kong," Wong said.

The changing eating habits of Hongkongers, such as lower sugar and less meat, also have a bigger impact on Western restaurants, he added.

That Outback will shutter three branches in tourist areas Tsim Sha Tsui and Hung Hom also emphasizes shifts in traveling, Wong said.

"The number of tourists has yet to recover to prepandemic levels and tourists now prefer Hong Kong-style cafes to Western and upscale restaurants," he said, adding this is giving that section of the industry more leeway.

"Some 300 restaurants are closing down every month while fewer than 200 are opening at the same time - a net decrease of over 100 per month," he noted, adding small and medium restaurants face more pressure than big chains.

But there is no closure wave, Wong stressed, as the difference of 100 restaurants is "not a large number" compared to the 18,000 restaurants currently operating.

Meanwhile, the Mandatory Provident Fund Schemes Authority said Outback has failed to pay contributions for some 40 staff from four branches in May and June.

ayra.wang@singtaonewscorp.com