Retail in Asia caught up with Manuel Palacio from Pirata Group, one of the leading F&B players in Hong Kong scene, to learn how entrepreneurs got creative to maintain their business during COVID-19 crisis.
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While many businesses have not been able to sustain the crisis, some others have been looking at alternative ways of remaining relevant to their customers. Being Hongkongers and expats stuck in the city since March, F&B has been registering a bounce back after the social distancing measures were eased.
Manuel, indeed told us that COVID-19 crisis had for his business both a positive and negative impact. On the one hand, he says: “this lifetime crisis businesses have been exposed to allowed everyone to rethink the way they conduct business, making better decisions and look into areas within the organisation that nobody would have looked otherwise, optimising operations, Human Resources and in general any other resources”. On the other hand, financial losses are big due to the COVID-19 and social unrest.
What did we ask him…
RiA: In which way business continuity was ensured in these months?
Manuel: The most important yet difficult was to make long-term decisions in a quite hard short-term outlook. Standing by keeping our talent and taking care of our assets despite loss making position has turned to be beneficial for us so far, although some days were difficult to believe better times will come when you see the immediate dramatic effect on business and people’s moral.
RiA: Have you implemented anything new such as delivery menus, or delivery for restaurants that did not have before or new areas covered?
Manuel: We have been more proactive when it comes to delivery of course, but without losing touch with our core business. The reality is that we are not a food business (supermarkets are), we are an experiential business and is not about putting food on your plate, but about making you feel in a certain way.
Through delivery platforms we can increase the reach to guests that we would have not be able to reach before, but are they really our guests or the platform guests? As we are slowly returning to normality our focus is back on the in-dining experience because this is our DNA.
We have looked back to our value proposition, our service, the quality of our product and recruited new talent to achieve new heights.
RiA: As you mentioned in other interviews with us, your customer base is 50% local, 50% expats, have you seen any shift in consumer behavior?
Manuel: The demographics change dramatically by area, in our case, as we are spread in different areas of the city.
In areas like Kowloon we are mostly 100% local as the tourism has evaporated, whereas the support in areas like Soho perhaps has been more mixed. Certainly it felt the local community was more conservative at the very beginning, rightly so after the scars of SARS. At a later stage we saw the expat community understanding that was a real threat and taking it more seriously, going back to a more mixed bag.
RiA: Even though tourists are not really your target, what is the indirect impact of their absence if any?
Manuel: Although we are absolutely driven by giving the Hong Kong community a great experience, tourism has an impact on everything we do, as Hong Kong relies heavily on external visitors, all our guests coming referred by our friends in hotels from one day to the other were gone.
Also areas like Wan Chai have been dramatically affected by the lack of Convention Centre activities, which to us, is significant in restaurants like The Optimist or Pirata.
Lastly, loosing Art Basel this year has converted March from potentially the strongest month for us, to a difficult
The more neighbourhood-driven restaurants, our smaller size ones, have been less affected since the support is mostly local. Our Guests have been incredible supportive with us when we needed the most.
RiA: How do you think the F&B landscape will evolve in HK and Asia?
Manuel: The impression that Hong Kong ergonomics position the city as a place that requires a dine out experience due to the lack of space at home and this will remain constant.
Now, given the uncertainty, none of us feels comfortable spending, there are people who do not have and others that have and do not feel comfortable spending at this point in time.
Therefore, value for the guests will be more important than ever, the same people will be more demanding because now there is a buyer’s market and there are a lot of options in Hong Kong, we will have to give more value than ever to remain relevant, it does not mean necessarily smaller prices but perhaps higher quality.
Hong Kong keeps on being resilient and it will always be the next great idea, it will be more difficult for those who can bear with these times to keep relevant people and be fresher and lighter in structure, but this will benefit the consumers tremendously.
I saw this in Spain in 2008, after the biggest crisis, a crisis that lasted more than half a decade, the businesses just got more creative and stronger, the country came back in a new and more prosperous way making cities like Madrid real worldwide culinary hubs.
RiA: Do you have any plans to expand into other markets?
Manuel: We always had the dream to explore international markets, and hopefully will do so when we have our affairs in order in Hong Kong.
RiA: Your latest project, The Pizza Project, is ready to kickoff its second branch in HK, how were the first months?
Manuel: Our second The Pizza project will be opening soon (July) in Star street, Wan Chai. We are very excited as it has been overwhelming the support we have received on our first trial restaurant in Central. We really did not know what to expect as the market is certainly crowded with good options.
To this day, we feel blessed with the work our teams have put through, driving the business and coping with large amount of guests, despite COVID-19 while maintaining the restaurant healthy and safe. Keeping the quality and consistency was the real challenge at the very beginning, still is today our main focus, we must remain humble and work harder than ever.
RiA: Any upcoming news to share about how you are turning this moment into an opportunity?
Manuel: We believe 2020 will be the year that will make and break us all, that is healthy and necessary, a reset was long overdue. There will be a lot of opportunities but we believe on remaining cautiously optimistic about it.
So far the most clear opportunity we see is from talent point of view, at the end of the day we are in people’s business and as other markets get weaker there is a lot of opportunity to source and secure fantastic people to join our team, all our efforts are in the Human Resources and operations function at the moment.
We have a large wish list of projects we want to accomplish in the next 24 months and we are getting closer to have the team we want, to accomplish them all.
Few projects are on the making and will see the light when times are right, meanwhile will make the projects we have just this 1% better each day.
RiA: Hong Kong scene is quite diverse, what areas do you see evolving faster and representing now cool hubs in the city and why?
Manuel: Having in mind we only understand 50% or less of the market, there is certainly a shift on direction in the nightlife, which is not necessarily our business, as we like to go to sleep at midnight like Cinderella.
Areas like Wyndham street or Lan Kwai Fong seems to have suffered a lot over the last 3 months and so far we do not see a big signal of recovery, but there is not many options other than that past midnight. There will be opportunity for sure, but we are unclear where and how this will evolve. We will be cheering for our friends in F&B to come with great ideas and hopefully we can enjoy them as their patrons.
In terms of Kowloon side, some Western groups are doing great job expanding on this areas such as Frites or Feather and Bone. It is very interesting to see how the city has become more eclectic and opened than ever.
At the same time is great to see how hotels like Rosewood are executing great concepts that feel more independent, so I reckon we will see a revolution in hotels in the coming years, from the hotel-driven business to a more experiential offering as their real state must be filled. Not sure this is necessarily because of COVID-19 or perhaps a generational change at the moment.
Wan Chai has definitely positioned itself like a foodie paradise with plenty of choices for every taste, and is currently possibly my favourite area for dining because of the variety and quality.
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Lastly, Kennedy Town and Sai Ying Pun have very neighbourhood-driven concepts that are great and we love to frequent, and areas like Sheung Wan that recently has seen a more interesting offering.
Last year, when Yardbird moved in, we have seen a lot of new exciting concepts popping up in this side of the city such as Soho House, the new Samsen and our concepts TMK and Honjo which took some time to gain momentum but now are growing stronger and stronger, today they are some of our best performing restaurants in the group.