【📢 FOODIVAL Blog ✏️ 】How does Hong Kong’s F&B Industry Fight to Survive Amid Wave of Closures?

For the local F&B industry, 2025 remains a challenging year due to an unstable economy compared to the pre-pandemic era. Meanwhile, many local residents flock to China for cheaper dining and shopping, or choose to travel abroad during holidays. This trend also brings negative impacts on local businesses, leading to a wave of closures in the local market. According to local media, over 290 shops and restaurants have closed or are about to close in the first half of 2025, with nearly 200 of those related to F&B industry. This includes small restaurants, time-honored brands and well-known chain restaurants such as Taipan Bread & Cakes, Ocean Empire Congee Shop, Seaview Food Shop, and the Dao Cheng Taiwanese Restaurant under the Tai Hing Group, accounting for nearly 70% of all closures. In the face of such a severe business environment, how can the F&B industry turn crises into opportunities?

💡Analyzing the Causes of Closures 

1. 💡Analyzing the Causes of Closures  🛒
   

   
   

   

   Many Hong Kong residents are attracted by the innovative shopping and dining experiences with affordable prices in the Greater Bay Area, causing an irreversible trend of “Mainland-Bound Consumption”. This phenomenon has evolved into a regular habit or even a ”must-do” item during regular weekends or holidays for many.Although research from The Chinese University of Hong Kong indicates that over 80% of Hong Kong residents' spending in mainland China is on daily services, which does not significantly impact local consumption on retail and dining. However, this habitual “Mainland-Bound Consumption” is undeniable, which directly leads to a substantial decrease in foot traffic in Hong Kong during holidays and weekends, causing certain negative impact on the F&B industry’s sales revenue, which can not be neglected.At the same time, other research centers have pointed out that even though mainland tourists frequently visit Hong Kong, changes in tourism patterns, shifting from high-consumption leisure to pure sightseeing, provide limited support for revitalizing the local F&B industry.

2. High Fixed Operating Costs 💰 The F&B practitioners have to deal with heavy workloads under a fast-paced environment. Apart from high labor costs and various management challenges, their fixed operating costs, including rent and ingredient procurement, are relatively high. In the face of a decreasing customer demand, it is difficult for them to adjust the above costs in the short run, leading to severe operational pressure, with some owners even choosing to close down their businesses to stop the deficit. Although some restaurants attempt to attract customers by lowering prices, the inflexible cost pressures further weakens their profitability, making it challenging for small and medium-sized restaurants to survive.

   
   

3. Intense Competition without Innovative Marketing Strategies💥  In addition to fierce competition within the local industry, many mainland chain restaurant brands have also expanded into Hong Kong, intensifying the competitive landscape. Local media estimated that over 60 mainland brands have entered the local market in recent years, including Mixue Ice Cream & Tea, CHAGEE, Luckin Coffee and  Tai Er Suancai & Fish, leading to "Shenzhenization" in certain mainland brands-intensive areas. Moreover, most mainland brands emphasize high-quality service and innovative dining experiences with active promotion through social media and events. This is somehow in contrast to the traditional operational models and negative perceptions of the local F&B industry, gaining more and more Hong Kongers’ attention and favor. 

   
   
   
   

💡3 Wining Formulas for the Local F&B Industry

1. Active Collaboration and Promotions to Stimulate Consumption 🔥 In the face of challenges, the local F&B industry must unite and work together to revive. Restaurants can actively participate in large joint promotional events organized by local associations or the government, such as the recent "1st July Promotion," to attract both tourists and local residents to dine locally, thereby revitalizing the local retail and dining sectors. The President of the Hong Kong Federation of Restaurants & Related Trades, Mr. Simon Wong Ka-wo, noted that there were over a thousand more restaurants participating and offering promotions during the event when compared to previous years. This is believed to help encourage citizens to dine out, boosting potential increase in revenue by 10%.

2. Innovative and Digital Marketing Solutions to Revitalize Brands 📣 While “Mainland-Bound Consumption” has become a trend, Hong Kongers’ consumption habits are also changing. They often compare local options with those in mainland China, favoring the affordable and diverse offerings available there. To adapt to these shifts and competition, local restaurants must discover new business models and strategies to survive. They can learn from the experiences of mainland restaurants and adapt those practices locally to enhance service quality and dining experiences, such as immersive dining and innovative flavors based on current trends. Additionally, leveraging digital marketing strategies, like promoting on platforms such as Xiaohongshu (Little Red Book), is crucial, helping attract mainland tourists. Notably, Xiaohongshu recently opened its first overseas office in Hong Kong, providing local brands with new promotional channels and ideas. Don’t miss the opportunity to explore it!

   
   

3. Accelerating Digital Transformation to Reduce Costs 🖥️

   

   One major challenge for the local F&B industry is the difficulty in lowering fixed operating costs in the short run. To survive an economic downturn, the industry must implement various cost-cutting measures to enhance profitability and ensure sustainable growth. Yet, relying solely on manual cost control and monitoring is insufficient.  Restaurants have to accelerate digital transformation footsteps by adopting a F&B procurement and inventory management system to streamline purchasing workflows and record inventory systematically. With accurate data, they can analyze essential metrics like ingredient and dish costs, wastage and supplier performance etc., allowing for better business strategies and improved cost control. Additionally, they can boost efficiency significantly with systems, such as using built-in AI technology to verify supplier invoices to save up to 70% of reconciliation time, reducing the manpower needed for manual processes and strengthening labor cost management further.

   
   
   
   

💬 Turning Challenges into Opportunities 

Despite a tough business environment, the local F&B industry is still optimistic about the future. Economic challenges and intense competition are actually driving innovation, urging businesses to seek new pathways and opportunities to survive. By leveraging advanced technology to boost efficiency, control costs, develop innovative flavors and implement diverse digital marketing strategies, restaurants in Hong Kong have injected new energy to revitalize the entire F&B industry. However, it is also vital for them to preserve local characteristics while absorbing the new in order to create an unique dining experience with local touch for both Hong Kongers and visitors, regaining Hong Kong's reputation as a "Food Paradise" ! 

If you wish to improve the procurement and inventory management of your restaurants while strengthening cost control and boosting profitability, please don’t hesitate to contact our system consultants for a free system consultation and demo session here!