by Ben Kwok
EJ Insight » Hong KongToday, 18:45
People living near Tseung Kwan O Centre complain that there are not enough dining options at the shopping mall. Photo: Inmedia
I can hardly describe the sense of loss I felt when I discovered that the nearest McDonald’s outlet from my home had downed its shutters for good.
I was aware that Tseung Kwan O Centre was undertaking some renovation work. So I assumed that the McDonald’s store will still be around, and possibly emerge on larger scale, after the renovation.
But I was wrong! The outlet, it turned out, had decided to call it quits after 13 years – without even saying goodbye.
That left me pondering: where should I (and others like me who try to get a value meal for HK$22) go now for a quick bite in a sit-down restaurant?
Now, it’s impossible to believe that McDonald’s, the world’s largest restaurant chain, had closed down the outlet because it was not doing well in the neighborhood.
The truth, in fact, could just be the opposite.
The sad reality is that the store may have been a victim of its own success. From what I have seen in the past two years, it was one of the three restaurants in the shopping mall that would see people regularly queue up outside.
But a thriving McDonald’s means less business for the other restaurants, and less demand for shop space from other food and beverage outlets.
Given this situation, the landlord may have opted to let go of the popular fast-food chain, hoping to attract other restaurant operators at higher rentals.
McDonald’s low pricing is one of the factors that have made the local fast-food industry, which operates on thin margins, very competitive.
Some fast-food restaurants offer lunch sets for as low as HK$32.5, which incidentally is the new statutory minimum wage for workers in the city, selling out the items fairly quickly.
It is not the first time that a long-standing and profitable McDonald’s outlet had to shut down. In April, one of the company’s famed stores closed down at Shatin New Town Plaza due to high rents.
The outlet, which had been in operation for more than 30 years, had once earned the distinction of being one of McDonald’s busiest restaurants in the world.
The US fast-food chain used to be the anchor tenant in many local shopping malls because it caters to everyone — be it a three-year-old or a senior citizen aged over 80.
But the situation is changing as surging rents and greedy landlords are forcing a shift in the tenant mix, with malls preferring high-paying, high-margin shops.
If tenants could make a wish, I believe they would want McDonald’s in their neighborhood mall, apart from other outlets such as Starbucks, Jade Garden, MX, Cafe de Coral, Hong Kong Day, Arome Bakery and Maxim cake shops.
But what chances can we give a low-price chain at a time when even some higher-end stores are finding it difficult to cope with the surging rents at fancy malls?
In the last decade, even Marks & Spencer was forced out of Pacific Place when the mall went for an upgrade.
Now in the context of McDonald’s struggles, we are justified in raising this question: Should a landlord pick his tenants based solely on what they can pay?
Or, should the decisions also take into consideration the needs of the community?
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