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‘A dead town’: Restaurants take whopping 80% hit from coronavirus

Anastasia Santoreneos
·7-min read
Many patrons are eating inside the Da Long Yi restaurant in Sydney's Chinatown.
Da Long Yi restaurants are usually buzzing. Source: Getty

Chinese restaurant owners in Sydney and Melbourne have revealed to Yahoo Finance they’ve seen a 60 per cent drop in sales on weekends and an 80 per cent hit on weekdays as a result of the coronavirus.

The death toll from the coronavirus outbreak in mainland China has surpassed 2,000 according to the latest figures, with 72,436 infections confirmed.

Australia currently has just 15 confirmed cases, but that hasn’t stopped Aussies opting to dine away from Chinese restaurants.

“Sales have been dramatically dropping - 60 per cent on weekends and 80 per cent on weekdays,” Orlando Sanpo, business development manager for EFC Group, revealed to Yahoo Finance.

Sanpo, who looks after Da Long Yi, Gotcha Fresh Bubble Tea and JiYu in Sydney’s Chinatown, said due to the sales drop, casual staff have had their hours cut too.

“It affects the economy and the dining environment in Chinatown as it’s looking like a dead town,” he said.

“Restaurants like JiYu and Da Long Yi - all ingredients are sourced freshly local, and Australia has one of the highest standards in terms of food safety and hygiene practices.”

Da Long Yi, based in Dixon Street in Sydney, is famous for its Sichuan hot pots, and is usually “highly successful”, Sanpo said.

Inside the Da Long Yi restaurant in Sydney's Chinatown.
Da Long Yi. Source: Supplied

Gotcha Fresh Bubble tea brought 10 stores to Australia just last year after a successful 2018, but the 2020 coronavirus outbreak could threaten their progress.

And the situation is just as dire in Melbourne, with Vivian Yang of Nanjing Story also revealing a 60 per cent drop in sales.

“We’ve lost most of the local people and regular customers, and of course some international students because most of them are trapped in China because of the virus and aren’t allowed to return,” Yang said.

“Our ingredients are all from Australia, so visiting our store to dine is incredibly safe.”

Linda Lau of Cantonese restaurant, Jimmy’s Place, in Canberra told The Canberra Times that in the last 18 years of trade, this has been the “worst time”, and she’s experienced a 30 per cent decline in business as a result of the coronavirus.

Another Sydney restaurant in Campelltown told Yahoo News it was losing thousands of dollars every week as fears surrounding the coronavirus escalate.

“Our sales have dropped heaps. Other restaurants in Cabramatta, anything Asian, they’re either closed or not trading well,” owner of Pho 76, Jenny Hua, said.

Kee Guan-Saw, principal of accounting firm KST Partners in Melbourne, said some of the firm’s food and beverage clients have been getting staff to take annual leave during the crisis.

“We have clients in the food and beverage and tourism sectors that are already being impacted and while they are currently handling the situation...if this is a prolonged crisis, then the impact will become greater,” he said.

Tour groups also feel the pinch

It isn’t just restaurants that are feeling the pinch at this time, with tour guide Judith Treanor, from Sydney, having to suspend her tours to Vietnam amid the crisis.

“My co-host Kerry and I were due to take a group of women to Vietnam in March for our ‘Shop Eat Love Our Vietnam’ ethical shopping tour,” Treanor told Yahoo Finance.

“We were all set to confirm hotel bookings and details with our partners in Vietnam, but then the seriousness of the coronavirus spread across the world.”

“After some consideration Kerry and I decided to postpone the tour to September - but we can't wait to return and support the local businesses and the tourism industry in Vietnam. We know they are suffering terribly already in Vietnam with approximately 30 per cent of their tourism cancelled.”

Treanor also said she was told “a major hotel” in Hoi An, a popular tourist destination on Vietnam’s coast, has shut until May.

Inbound tourism businesses have also been hit, according to Guan-Saw from KST Partners, with the coronavirus hitting one of his client’s client base dramatically.

“The business is trying to get back deposits worth hundreds of thousands of dollars from hotels and various attractions; if they’re successful they will be okay, but if not then the business will suffer,” Guan-Saw said.

“And looking forward, if the coronavirus endures and the federal government issues a full travel ban, many businesses like this will be devastated.”

Coronavirus will have a “lasting effect”

According to Sydney-based insolvency company Jirsch Sutherland, the effect of coronavirus won’t stop at slow restaurant sales.

“There are a number of knock-on effects, such as falling demand for Australian produce like seafood, which affects food suppliers; local Asian restaurants being shunned (with some temporarily closed); and international university students delaying coming back to their courses,” Jirsch Sutherland managing partner, Bradd Morelli said.

And while it’s unknown how long the coronavirus threat will be around, Morelli said it will have a lasting effect on many businesses.

Seven staff members at the Gotcha Fresh Tea restaurant in Melbourne are standing in a line holding different kinds of fresh tea.
Gotcha Fresh Tea. Source: Instagram

“Fixed costs for businesses, such as wages, rent, utilities, financing costs and statutory liabilities are not affected by the sales decline, but the anticipated downturn in revenue will have a huge impact on working capital, and those businesses without sufficient reserves may find themselves suffering cash-flow issues,” Morelli said.

Then there’s the threat to supply chains.

“The closure of factories and transport links for any period of time will inevitably lead to massive disruption and supply issues once existing stocks are exhausted,” said Morelli.

“For a small business, this can be catastrophic. Particularly if suppliers only have enough material or product to support some customers – that is, the larger customers.”

SARS parallels

The drop in business caused by the coronavirus outbreak is something we’ve seen before: during the 2003 Severe Acute Respiratory Syndrome (SARS) outbreak in China and Hong Kong, Chinese and Asian restaurants reported severe sales hits.

Some US restaurants reported a 70 per cent drop in their business at the time.

"It spreads like wildfire," David Chin, manager of the Chung Wah Hong Market in Boston told the Sydney Morning Herald at the time.

A father and son wear masks in Hong Kong airport as flights are delayed. The little boy is sitting on his father's lap holding a phone.
Fears from the coronavirus outbreak have seen Chinese restaurant profits take a hit. Source: Getty

"All these things generated a kind of hysteria, if you will, and now I think even if someone gets a common head cold they're going to be rushing to the emergency room."

“Everybody's afraid to come down to Chinatown."

Social media campaign springs to action

In a bid to boost tourism to Chinese restaurants across Australia, a new social media campaign has emerged urging customers to rally around their local Asian eateries.

The #IWillEatWithYou campaign asks Aussies to pledge to “defeat baseless fears” and support businesses during this time of need.

This is the #IWillEatWithYou campaign logo. It is a bowl of noodles with chopsticks. The campaign logo is on top of the chopsticks.
The #IWillEatWithYou campaign is urging Aussies to rally around their local Chinese eateries. Source: GetUp

“As misinformation about Coronavirus spreads across social media, local Chinese restaurants and stores are paying the price - with some losing up to 50 per cent of their revenue,” the campaign’s site states.

“That's not because of doctor's orders or common sense, it's because of fear.

“While other restaurants and public spaces are still buzzing, it is the Chinatown restaurants and Asian grocers that stand empty. Panic around the virus is unfairly impacting Chinese and Asian communities.”

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