Industry Expert Warns of Potential Domino Effect of Restaurant Closures as Rent Reprieve Ends
by: The Beat Asia
September 16, 2022
Following the sudden news of local bakery chain Crostini folding due to debt from the rent deferral scheme and mounted pressures from pandemic-induced losses, a representative of Hong Kong’s restaurant industry warns of potential future closures across the entire industry, the South China Morning Post reports.
Speaking to the president of the Hong Kong Federation of Restaurants and Related Trades, Simon Wong, SCMP reported that up to around 8,000 local businesses in the food and beverage scene have been met with pressure from landlords to pay off accumulated rent from a three-month deferral period.
Introduced in April and enforced from May to August, the government rental enforcement moratorium was introduced to allow commercial premises to avoid legal prosecution upon failing to meet rent deadlines for up to three consecutive months. However, tenants would have to make up for the outstanding rent once the time is up.
At a press conference held in February, Secretary for Financial Services & the Treasury Christopher Hui explains the move by rationalising that “from a tenant’s perspective, it is obvious that when they are undergoing this short-term cash flow issue, with this rental enforcement moratorium, they may be able to relieve some of the short-term burden on their finances and be able to pick themselves up going forward, when the COVID-19 epidemic situation improves.”
Amidst longstanding gathering restrictions and dining curfews, the Federation estimates that a quarter to half of food and beverage establishments in the city who have been affected by rent repayment may have to shut down if negotiations end up sour.
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