7-Eleven cafes to sell local cuisine

The first shots have been fired in a Hong Kong fish ball war that is pitting the city's traditional street-food vendors against the world's most ubiquitous convenience chain.
The front line in this culinary battle is busy Tong Chong Street in Quarry Bay, where last month a new 7-Eleven shop started selling laksa, fish balls, egg tarts and milk tea from a large kitchen counter.

The retailer, which has almost 1,000 shops in Hong Kong, is expected to roll out more such counters across the city as it vies for a slice of a market that for generations has been dominated by small street traders.

Curried fish balls, siu mai, milk tea and pineapple buns are Hong Kong cultural icons for the armies of hungry office workers and labourers who grab them on the street to munch on their way to work. Whether they take to a version served up by a global retail giant, though, remains to be seen.

The 7-Eleven version, dubbed  7 Cafe, is apparently off to a good start, with sales of up to 600 cups of milk tea a day at a promotional price of HK$3 on Tong Chong Street. That is about one-third of the price charged by nearby food vendors.

Tong Chong Street is packed with office workers and schoolchildren on most days.

"We were surprised by the popularity of some products - for example, the milk tea ran out on the second day," said Tim Chalk, commercial director for Hong Kong and Macau at Dairy Farm, which owns the 7-Eleven franchise locally. "It is a worldwide trend for convenience stores to move to hot food-on-the-go."

But nearby street food vendors are unimpressed by the quality of the fare served up by 7-Eleven, even though it has hired an executive chef from a five-star hotel to ensure the food is safe and tasty.

Ming Kee, a street-food counter that has been selling breakfast, lunch and afternoon tea on Tong Chong Street for 18 years, concedes that it has sold fewer breakfasts and milk tea lately, but does not think 7 Cafe poses a threat.

"Do you think 600 cups of milk tea is a lot?" Ming Kee owner Wong Ming-sang asked. "When Hoixe Cake Shop started selling milk tea two years ago, it sold 1,000 cups a day."

Hoixe, a franchised bakery, was shut down last month and its site is now occupied by 7 Cafe. "Although [7 Cafe] has opened, our business has returned to normal," Wong said.

From IFC in Central to public housing estates in Tin Shui Wai, fish balls, siu mai, meat balls, milk tea, egg tarts and pineapple buns are part of the city's daily fare and are popular with people of all ages.

With a menu spanning breakfast, lunch and afternoon tea, the 7 Cafe is also competing against arch-rival Circle K, Cafe de Coral, McDonald's and other food vendors in the Tong Chong Street neighbourhood.

Chalk said the HK$3 milk tea deal would be extended to the end of this month. But Wong said Ming Kee had no intention of cutting prices as that would mean lowering quality.

"Price is not the only factor," said Wong, who sells milk tea for HK$9 a cup. "We use Holland's Black and White Cow milk, which is the most expensive evaporated milk in Hong Kong. [7 Cafe] uses Nestle, which is cheaper."

Competition from 7-Eleven comes at a bad time for the city's street-food vendors. Wong and the other food vendors on Tong Chong Street are chasing fewer white-collar customers from nearby Taikoo Place, the complex of office towers owned by Swire Properties.

The city's unemployment hovered at a four-year peak of 5.4 per cent last month, but economists widely expect the worst is yet to come.

Wong and his family owned their premises, so they were faring relatively better than vendors who faced rising rents. The Wongs also own the 300-square-foot shop occupied by the Circle K convenience store, which is in between 7 Cafe and their own food counter.

The operator of the Circle K chain, Convenience Retail Asia, declined to comment on 7 Cafe's impact on its business. Circle K sells milk tea, toast and pizza on a made-to-order basis.

Circle K, which signed a six-year lease two years ago, faced a 9.75 per cent increase in rent next year as part of its contract, Wong said.

Chalk said 7-Eleven's reason for choosing Tong Chong Street was mainly because of its busy traffic of white-collar workers.

Despite the stiffer competition, the owner of Chinese dumpling shop King of Siu Mai, next door to 7 Cafe is undaunted.

"Consumers are curious about new things, but the curiosity normally lasts for three days and our customers come back," King of Siu Mai owner, Ah Ming, said, pointing to the crowd of customers in front of her shop.

Thomas Wong, a regular customer at King of Siu Mai, said 7 Cafe provided a choice, but he would stick with his favourite dumpling store. The store has sold fish balls, siu mai and meat balls for more than 10 years on Tong Chong Street. "I have been coming here [King of Siu Mai] for years, and have no intention of trying out [7 Cafe]," he said.

Retail competition has become so punishing in Hong Kong that the  7 Cafe is even "cannibalising" the customers of the 7-Eleven store immediately next door. Chalk said sales at the 7-Eleven had dropped 5 per cent since the new store was opened. The two stores offered different products, Chalk said.

While the buzz that 7 Cafe created on Tong Chong Street has died down, other bustling areas of the city are set to feel its impact soon. Chalk said the Tong Chong Street 7 Cafe was the first of many in the pipeline. Dairy Farm, which owns half of the 945 7-Eleven stores around the city (the rest are franchised), plans to convert the group's stores into 7 Cafes.

Future 7 Cafes, which would occupy 1,000 square foot of space, would be located in high-traffic locations, including Causeway Bay, Central, Admiralty and housing estates. Chalk would not say how many were planned.

SCMP. Sep 7, 2009.