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On the menu: universal lessons about the restaurant business

Hong Kong is one of the best, and worst, places in the world to start a restaurant.

It has some of the highest rents on the planet but also a population of seven million, with more than 70 per cent eating out for lunch two or more times a week.

It's where young Canadian entrepreneur Anthony "Tony" Cheng and two silent business partners decided to start their fledging food business, learning universal lessons about the trade.

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"I am passionate about cooking. But people have to understand that a restaurant is a business," Mr. Cheng said.

"So many people think: 'I want to open a restaurant because I like to cook, and, if I have my own place, I can hang out there with my friends and I can always get a table.' I see a red flag when I hear that," he added.

In the summer of 2010, the three food-loving businessmen opened their first Hainan Shaoye, a casual mid-priced eatery that specializes in quality Singapore-style chicken rice, at the upscale World Trade Center mall in the Causeway Bay shopping district.

A set-menu meal at Hainan Shaoye, a name that alludes to someone from Hainan province with refined tastes, typically costs $100 (Hong Kong), or about $13 (Canadian).

"We identified a niche. Chicken rice is a popular Chinese comfort food. The way we present it is as an 'affordable luxury.' There are many places that do the dish but we focus on the best ingredients," said Mr. Cheng, Hainan Shaoye's active operating partner.

Mr. Cheng originally trained as an auditor at accounting firms Ernst & Young and PricewaterhouseCoopers LLP before working for a few years as an investment banker at Macquarie Group in New York.

In 2008, he returned to Hong Kong where he has family, intending to start a career in restaurants.

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After eating about four chicken rice meals a day for a week on a trip to Singapore as part of his research, Mr. Cheng brought on as a consultant Han Seng Fong, a 70-something former chef at the Mandarin Orchard Singapore Hotel, who is famous for his chicken rice.

With such a pedigree and offering accessible prices, Hainan Shaoye from the start attracted foodies who quickly grew impatient about the month-long bookings list that formed and would wait hours for a walk-in table.

It was a success that nearly led to disaster.

"The reviews were mixed and what matters is how many you dissatisfy," Mr. Cheng said.

"From those early days, I learned that it doesn't matter that you're newly opened. As long as you open, you have to be on your game. Word spreads very quickly. It is important to have consistently good food, but you cannot let people wait for a table like that. No kind of food will satisfy someone who has had to wait that long."

While the buzz about the long queues was good, in hindsight he said that he would do things differently.

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For one, he would discourage starving foodies at his door by closing bookings firmly and maybe offering discount coupons for people to return another day.

Mr. Cheng would also make the waiting more comfortable for those with confirmed tables by perhaps serving drinks or snacks.

The restaurant weathered the unhappy hoards from the early days and has focused on keeping up the standards of its food.

Just a year after opening, Mr. Cheng, 29, said he and his partners have made back their initial $3.5-million (Hong Kong), or $448,000 (Canadian) investment, the brand has a regular following, and Hainan Shaoye been approached by nearly every major mall operator in town about opening a branch in their complex.

Hainan Shaoye opened another successful outlet in December in the bustling Ocean Terminal shopping centre and Mr. Cheng is preparing to launch one more later this year in the busy Sha Tin neighbourhood.

Mr. Cheng, who is also planning a new restaurant concept to launch in a few months, believes eight is the optimum number of Hainan Shaoyes in Hong Kong.

However, he and his partners are already looking at possible expansion into China and are also open to launching the brand in major Canadian cities, where many affluent mainland Chinese either set up homes or visit frequently.

"I can see demand for Hainan Shaoye in Canada in places like Vancouver and Toronto. However, we would need a strong franchisee with a good solid background in f&b [food and beverage], a good back office to run the business, and passion for food," said the brand's founder.

Mr. Cheng, who was born in Edmonton, realized he would develop a life-long passion for cuisine and cooking as a 14-year-old in boarding school in Britain.

"I roasted a chicken according to a Jamie Oliver recipe. It was the first time I bought a chicken from the supermarket," he recalled.

"I stuffed it with lemons, rubbed it with olive oil. I was pleased with how the chicken came out but what struck me was how my friends enjoyed it and the ambience it created. It made me think about how food can change the mood and affect emotions."

Special to The Globe and Mail

Alexandra A. Seno has written about economics and business trends in Asia since 1994. She is a regular contributor to Newsweek, the International Herald Tribune and The Wall Street Journal Asia. She lives in Hong Kong.

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