The Shay Rebellion | Christopher Shay

Hong Kong’s Hidden Cafes

by Christopher Shay

As Starbucks and Pacific Coffee Company continue to make their move into the Hong Kong market, dozens of small, independently owned coffee shops lie hidden on the upper floors of the city’s buildings, hoping to sneak by rising rents and increased competition.

Quaint and sometimes quirky, these lau seung (“upper-floor”) cafes serve as a respite from the busy shopping streets below and the cramped quarters many of their young customers inhabit. By locating above street level they avoid the high rents of ground-floor spaces and create an in-the-know marketing strategy, far different from the high-visibility approach of their chain competitors.

Many have themes: Some tout board games, others boast large libraries and some are filled with teddy bears and live pets. One is designed to look like an elementary-school classroom, with wooden desks and chairs for seats and tables and notebooks as menus. While almost all serve tea and coffee (you may find alcoholic beverages as well), some also specialize in particular types of food, from seafood to pasta to cheesecake.

Upstairs Cafes

Above the bustling streets of Hong Kong, dozens of small, sometimes quirky, independent coffee shops lay hidden on the upper floors of high rises. An inside look at a few.

“These kinds of shops have different personalities—just like people,” says Chloris Leung, a 16-year-old upstairs-cafe regular. She prefers Think Café with its large book collection, plush sofas and views of Causeway Bay shoppers below.

Upstairs cafes started gaining in popularity 10 years ago, about the same time that Starbucks entered the market. More than 200 of these independent cafes are now tucked away throughout Hong Kong, mostly in Causeway Bay and Mong Kok. But at least another 150 of them have shuttered in the past decade, according to OpenRice, an online database of Hong Kong restaurants.

With more than 60% of revenue going to rent, Otto Luk, 34, co-owner of the Think Café and a former journalist at the Hong Kong Economic Times, says he’s not running his coffee shop for the money. His bright 25-seat shop doubles as a place to run financial seminars, which is his main source of income, but as a cafe, the shop breaks even, he says.

“This is not really for profit,” Mr. Luk says. “We like more to make friends here.”

It’s a sentiment shared by many owners. Cynthia Leung, the 33-year-old co-owner of the Cat Store in Causeway Bay, started her cafe, home to 13 cats, more than a decade ago. She says her shop usually breaks even — her rent has increased by 20% since 2006, she says — but she doesn’t mind not making more money.

“I wake up and I want to go to my office everyday,” she says.

Ms. Leung says many people come to the café to talk to the cats about their problems. “Cats are a kind of therapy,” she says. “People find trust with them.”

But if her rent continues to rise, she adds, she may have to close shop.

Retail rents in Hong Kong in the fourth quarter of 2010 were up 12% from a year earlier, according to CB Richard Ellis, a multinational real estate company.

And the chain coffee shops keep multiplying. According to Euromonitor, an international market research firm, the number of coffee shops like Starbucks and Pacific Coffee in Hong Kong more than quadrupled between 2001 and 2009, and it predicts continued expansion throughout the city over the next few years. Starbucks, which opened its Hong Kong first store in 2000, now lists 115 on its Hong Kong website. Pacific Coffee Company, owned by Chevalier Pacific Holdings Ltd. and the Chinese-government backed conglomerate China Resources Enterprises, boasts 123.

Still, many owners and patrons of upstairs coffee shops say Starbucks isn’t the competition because they cater to a separate, usually younger, audience.

“We offer something different,” Ms. Leung says.

For customers like Andy Lau, a 23-year-old music producer, upstairs cafes serve as a second living room. He and a group of three friends recently caught up at Café Dream On, a 36-seat Causeway Bay shop. They say there are few places in Hong Kong where young people can hang out for hours and just trade ideas.

If upstairs cafes close, says Mr. Lau, “we’d probably have to go to Starbucks. But we wouldn’t want to.”

Check out the attached slideshow of some of Hong Kong’s upstairs cafes.

Category: Article, Lifestyle

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