Outback shuts 9 Hong Kong steak houses, lays off 300 as diners head to mainland China

The Australia-themed, American restaurant chain Outback Steakhouse announced it will close nearly half its branches in Hong Kong, blaming high rents and weak sales, as the city's consumers troop to mainland cities like Shenzhen for shopping and entertainment amid easier cross-border travel.

Outback will shut nine of the 19 branches it operates in the city, affecting more than 300 of its staff, it said. The chain has outlets located across the city, from Hong Kong Island to New Territories, and opened its newest branch, spread over 3,800 sq ft in Central, in April.

The global restaurant chain, founded in 1988, is known for its signature steaks which are priced from HK$288 to HK$518, with the average dining cost ranging between HK$201 and HK$400, according to online food and restaurant guide OpenRice.

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

"We have made the difficult business decision to cease operations of nine Outback Steakhouse restaurants in Hong Kong," the company said in a statement. "This decision is the culmination of a meticulous review process that considered current market conditions, our operational costs, and the strategic direction of our company."

Majority-owned by Bloomin' Brands, a Florida-based casual dining company, the chain operates more than 1,000 restaurants globally, with 694 in the US alone.

The Hong Kong outlets that will be closed are located in Discovery Park, Causeway Bay, Wan Chai, Tsim Sha Tsui East, Tuen Mun, Whampoa, Telford, Silvercord Tsim Sha Tsui and Lohas Park.

"We remain committed to the Hong Kong market with our 10 branches and will continue to serve customers with the same commitment to quality and excellence that they have come to expect from the Outback brand," the company said.

Hong Kong's retail sales fell 11.5 per cent to HK$30.5 billion (US$3.9 billion) in May from a year ago, the second consecutive month of double-digit decline, according to the government.

The downturn was largely attributed to the rising trend of cross-border spending, as more Hongkongers flock to the mainland to take advantage of lower prices for dining and shopping.

The retail sector may continue to face challenges in the near term, said a spokesperson for the Census and Statistics Department earlier this month.

Outback Steakhouse is not the only retailer to have taken a hit. Grocery chain 759 Store last week said that it was freezing major investment plans and reviewing tenancy agreements for its 165 outlets. Japanese fashion retailer GU, a sister brand of Uniqlo, is shutting its 6,000 sq ft outlet at Hysan Place in Causeway Bay.

Lawmakers in the city have called on the government to lower commercial rents, after a survey conducted among 409 individual shop owners found that more than half the business owners saw increased rents despite lower footfall and sales numbers.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2024. South China Morning Post Publishers Ltd. All rights reserved.