Understanding the Struggles of Hong Kong’s Cafe de Coral and Fairwood: What’s Behind the Fast-Food Downturn?

Two of Hong Kong’s largest fast-food chains, Cafe de Coral and Fairwood, faced a significant challenge last year with profits plummeting by nearly 30%. Experts point to an ageing customer base and fierce competition from delivery services as key factors in their decline.

Historically, these chains showed resilience during past economic downturns, such as the financial crises of 1997 and 2008, and even during health crises like the SARS outbreak in 2003 and the COVID-19 pandemic in 2020. Yet, both Cafe de Coral, founded in 1968, and Fairwood, established in 1972, now confront what may be their largest hurdle in over 50 years.

Billy Mak Sui-choi, an associate professor at Baptist University, explains that these fast-food chains are considered “inferior goods.” This means they usually do better when the economy struggles. Surprisingly, they even outperformed mid- to high-tier restaurants in the past. But things have changed.

Today’s landscape includes intense competition and shifting consumer habits. The ageing population also plays a role, as older diners may not prefer fast food. Another critical factor is that neither Cafe de Coral nor Fairwood has effectively entered the delivery market, which has seen explosive growth recently.

In the last financial year, Cafe de Coral Holdings reported a 29.6% drop in net profit, amounting to HK$233 million. Fairwood Holdings was not far behind, with a 28.8% fall, bringing its profit down to HK$36 million.

Recent data supports the idea that dining habits are shifting. A survey revealed that nearly 60% of diners now prefer ordering food online over dining in. This change highlights the urgency for these chains to adapt to new customer expectations.

Crowdsourcing opinions on social media, many consumers express disappointment with the limited delivery options from these brands. As preferences evolve, the challenge grows for traditional fast-food joints to keep pace and remain relevant in a fast-changing food scene.

For more insights on how consumer behavior is shaping the restaurant industry, you can refer to this report from Statista.

Source link

Shanghai Commercial Bank, Ryan Lam Chun-wang, Asian Financial Crisis, Cafe de Coral, Hang Seng Index, Hong Kong Baptist University, Greater Bay Area (GBA), Francis Lo Fai-shing, SARS, COVID-19, Fairwood, Hong Kong, Causeway Bay