Investigative news agency FactWire has found at least 62 Hong Kong takeaway outlets posing as restaurants in Hong Kong malls, office buildings and the airport.
As holders of a “food factory” licence, they are exploiting a loophole to profit from public space, says the agency.
When FactWire reporters visited more than 70 eateries in shopping malls, office towers and government buildings across the city, they found that at least 62 coffee shops and small eateries with food-factory licences have set up seats for customers. They include high-profile outlets of chains such as Agnes B Cafe, Caffe Habitu, Crostini, Delifrance, Pacific Coffee, Starbucks and Tom n Toms Coffee.
These coffee shops are scattered across shopping malls including APM, Festival Walk, Fortune Metropolis, iSquare, Lok Fu Plaza, MegaBox, Moko of Grand Century Place, New Town Plaza, Pacific Place, PopCorn and Tsuen Wan Plaza.
The malls renting out shop areas to eateries that breach the food-factory licensing requirements involve at least 20 property developers, including Fortune REIT, Henderson Land, Kerry Properties, Kowloon Dev, Link REIT, MTR Corporation, Sino Land, Sun Hung Kai Properties and Swire Properties.
Hong Kong Food and Environmental Hygiene Department (FEHD) data shows there are 7280 eateries with a food-factory licence, also known as the “takeaway licence”, which covers food businesses involved in preparing food for sale “for human consumption off the premises”. This means that any food-factory licence holder setting up seats for customers is breaching licensing requirements.
FactWire confirms that none of the 62 mall eateries it named were prosecuted for running an unlicensed restaurant last year.
In contrast, food-factory licence-holder Kung Wo Bean Curd Factory in Sham Shui Po was prosecuted by the FEHD three times in 2015 and last year for setting up seats for customers. According to the demerit points system for licensed food premises, 15 points were deducted for “operating other classes of unlicensed food business on the premises”, which led to Kung Wo’s licence being suspended for five days last month.
Hong Kong Free Press (HKFP) reports that mall tenancy agreement experts say developers acquiesced to, or even taught, tenants with the food-factory licence to “pose” as restaurants so as to stimulate customer spending. However, the seats occupied by customers should have been available for public use.
Labels indicating “available for public use” were found on the tables and chairs of Arome Cafe in Metroplaza, Starbucks in Times Square and The Coffee Academics in Gateway Arcade of Harbour City. However, all the other eateries of the 62 listed had installed tables and chairs either inside the shop or along nearby corridors, say FactWire reporters, whose investigation took seven months.
Designed to match the shop style, the tables and chairs are provided specifically for customers. Waiters take food to customers, clean the tables afterward and drive away users who do not buy food.
Tables and chairs can be classified into three categories:
1) Seats installed in a rented shop in a mall acting as a restaurant (for example, Starbucks in Festival Walk, Pacific Coffee in Moko of Grand Century Place, and Tom n Toms Coffee in APM)
2) Seats installed in a rented open area and nearby corridors in a mall, a small number of them indicating “available for customer use only” (examples include Agnes B Cafe at the airport, and Starbucks in MegaBox)
3) Seats installed in nearby corridors of a rented open area in shopping malls, with fences, and tables and chairs used to separate the area, giving the impression of an open-style restaurant (such as Crostini in Tuen Mun Town Plaza, Pacific Coffee in Silvercord and Starbucks in HomeSquare).
In a seminar on restaurant licensing this month, FEHD representatives reiterated that food-factory licence holders are forbidden to provide seats, and should they do so they would be “repeatedly prosecuted by the FEHD until finally losing their licences”.
FactWire quotes experts as saying that when the shop areas in malls marked for coffee shops and small eateries fail to comply with fire safety requirements, the tenants apply for a food factory licence instead of a restaurant licence, and set up furniture along the corridors to run the shop like a restaurant.
The experts say the eateries are exploiting a legal loophole. “That’s why, in order to avoid FEHD prosecution, many small eateries offer only utensils made of paper, even for customers eating there. Should FEHD officials ever come over for routine inspection, the staff could say the customers took the food and ate outside on their own, so no regulations were violated.”
They also say the tables and chairs are in reality available for public use. “It is an illusion the eateries create on purpose that people have to make purchases to sit there.”
To apply for a food-factory licence, eateries need only provide layout plans of the kitchen, food-preparation room and hygiene amenities. A layout plan of the entire rented area is not needed.
FactWire has also investigated four tenancy agreements, pointing out that areas marked for seating on mall floor plans are actually open areas, including corridors.
As well as 40 shopping malls, FactWire reporters also visited office towers and government buildings. They found that at least 20 coffee shops or eateries on the ground floor of officer towers and two at the airport also hold food-factory licences yet have set up tables and chairs.
Under the Food Business Regulation, all restaurants providing seats must acquire a general restaurant licence or a light refreshment restaurant licence from the FEHD.