Restaurant chain Tsui Wah sells assets to survive

By ZHANG Xiaoyi

Hong Kong based restaurant chain Tsui Wah made a HK$56 million profit last year, compared with the HK$124 million loss made in 2021, according to the company's financial report released on June 30.

It's not, however, the good news it seems at first sight.

Wrong sort of business

The profit didn’t come from the restaurant business but from real estate. The tea house operator sold several properties for HK$84 million (US$11 million, 78 million yuan) and got some subsidies from the SAR government.

Last year, Tsui Wah’s profit from restaurants dropped 14.9 percent to HK$846 million. Profit from the Chinese mainland was down a quarter compared with 2021 to HK$368 million.

Tsui Wah is a chain of tea restaurants with branches in China and Singapore, owned by Tsui Wah Holdings Limited. Founded by Choi Cheung in 1967 in Mong Kok, the company had seven branches by the time of his retirement in 1989.

Serving Hong Kong-style food and initially catering to Hong Kong's construction workers, the first Tsui Wah outside Hong Kong opened in Shanghai in 2009, followed by Macau and Wuhan. Tsui Wah now owns 34 restaurants in Hong Kong, 39 in the mainland, with another three in Macau and Singapore, though some remain closed.

Blame the pandemic?

In the report, the company blamed the continued poor performance on the pandemic and said things had recently been improving. But Tsui Wah’s trouble began before the pandemic. In H1 2019, it reported a HK$44.5 million loss, the first since it went public in 2012. The company has been bleeding money ever since.

In Q1, the catering business brought in HK$27.6 billion, up 81.7 percent year on year, but it is important to remember just how disastrous last year's figures were.

Rising prices, sinking profits

At the same time as diners are returning to restaurants, labor costs have risen. The city’s median hourly wage was HK$77.4 last year. Hong Kong’s minimum wage rose HK$2.50 this year to HK$40 an hour, after a four-year freeze.

All service sectors are now shorthanded, and Hong Kong is set to import around 20,000 workers in a bid to alleviate the labor crunch. The labor force dropped from 3.7 million in 2018 to 3.5 million last year.

The cost of ingredients has also increased. Grocery prices in Hong Kong are up 10 percent from pre-pandemic levels, while canned food is often as 30 percent more expensive.