22/03/2024
By Justin Fung
DCH offers discounts as high as 30% off after the announcement of the closure on 15 March. Photo: Justin Fung/Shroffed
After operating for 39 years, Dah Chong Hong (DCH) Food Mart, a grocery chain based in Hong Kong, will permanently close its stores.
In the internal termination notice, DCH told its staff that the company has been facing uncertain external factors and operational challenges. The company has yet to disclose an exact cessation date, but it is certain that all 28 of their brick and mortar stores will be closed. The DCH Cooking Buddies Membership Program and mobile app will also be brought to an end on April 1, with electronic coupons expiring on the same day.
However, it will continue to provide procurement, distribution, and food processing services for the Hong Kong market.
Katoya’s branch in Sham Shui Po goes out of business on 18 March. Photo: Justin Fung/Shroffed
DCH going belly up is not a one off event, as Katoya, a restaurant chain which mainly serves Japanese style beef rice bowls, announces the plan to cease the operation of all 4 of their branches by the end of March.
In the notice posted in one of their branches, Katoya cited that it ”faced challenges during the pandemic and was under immense economic pressure” and was “supposed to go out of business three years ago”.
Louis Ho, a patron of Katoya since his high school years, was saddened and shocked to hear the restaurant chain winding up in such short notice.
“I used to dine at Katoya at least once a week. It’s such a bargain [for what they serve]. I certainly did not anticipate their closure since they have so many customers.”
-Louis Ho
Contrary to his belief, restaurants are still struggling to recover from the slump during the pandemic. Although restaurant receipts rose to HK$10538 million in 2023, the figure is still about HK$1000 million behind that before the pandemic.
The value of retail sales of food, alcoholic drinks and tobacco (other than supermarkets) has recorded a -8 year-on-year percentage change, and a -14.3 year-on-year percentage change of value of retail sales of supermarkets and supermarket sections of department stores in January this year according to the Census and Statistics Department. Sitting at HK$36,518 million, value of retail sales of all retail outlets has yet to rebound to previous high of the same month in the past decade with a deficit of roughly HK$11000 million.
A shift in consumption behaviour of Hong Kong citizens is said to be a contributing factor to the insufficient momentum to rebound from the decline of retail sales in the past few years. With the opening of the Hong Kong-Zhuhai-Macao Bridge and implementation of the Northbound Travel for Hong Kong Vehicles scheme, it is undoubtedly more convenient for citizens to travel across the border.
Local media reported earlier that the catering industry expects a closure of about 3000 restaurants in the near future. Simon Wong, the President of HK Federation of Restaurants and Related Trade, admits that business has been extremely poor after the Lunar New Year. With nearly 6 million Hong Kong residents travelling north each month, the impact is significant, and it is likely that there will be a wave of closure.
An empty premise in Sham Shui Po is awaiting a new tenant. Photo: Justin Fung/Shroffed
There is not much prospect of recovery to pre-COVID levels, as the outflow of customers introduces local shops to new competitors across the border. In the ‘Top 10 Trending Influencer Stores in the Greater Bay Area in 2023’ list compiled by Yahoo, 6 that made the list are restaurants. Topping the list is Sam’s Club, a wholesale club which blew up on social media for providing products such as groceries at a lower price by bulk purchasing, which could be seen as a competitor of stores like DCH.
A relief for local shops is that price is not the sole determinant when it comes to purchases, as Mr. Cheng, who had shopped at DCH, takes a multifaceted approach.
“The most important factors for me are the past shopping experience and the quality of the products. I think brick-and-mortar stores in Hong Kong still have the edge, especially for more costly food ingredients.”
Reported by Justin Fung
Edited by Athena Zhou Zixi