The Diner has closed after just five months*. Peanut butter and bacon jam milkshakes and $348 burgers did not go down well in Sai Kung. Despite the high-visibility location on Po Tung Road most residents never went there, except for this correspondent who liked to have a beer sitting at the wide-open frontage watching the passing parade. Once you had been there a few times you grew to like the 1960s music and 1950s movies.
Owners Marcus and Sarah Thompson made three main mistakes. They took on far too much rent ($150,000 a month according to previous tenant Eric, a shady Malaysian who didn’t want anyone to know his full name), not researching the market thoroughly in advance which would have shown low week-day business, and entering the Sai Kung scene with prices considerably beyond residents’ expectations.
The Thompsons’ losses will amount to more than $5 million. (Your correspondent can make an educated guess after 28 years as a director of a medium-sized chain — 10 restaurants at its peak). Their investment in 1950s American diner decor was lavish and with wall shifting and kitchen fit-out must have cost at least $4 million, probably more. Add five months of rent at $750,000, plus staff salaries, termination costs, electricity, food wastage, site reimbursement, et cetera. It is clear the losses will be above $5 million, conservatively estimated. Extricating themselves from the lease is likely to be costly.
It would not have taken long for the Thompsons to realise their investment was going horribly wrong. They cut staff numbers**, the more costly ones going first, offered discounted mid-week meal deals and towards the end, reduced opening hours. People stayed away in droves. They smelled failure.
Another mistake was not to engage more with the community. Momentai has demonstrated how to do it, establishing itself in a short time as one of our best entertainment centres, along with the Tikitiki Bowling Bar. The Picture House, new too in town, is reaching out to residents with a local authors’ book signing and other events. Perhaps the Thompsons had realised that their business model in this market was a hopeless case.
The two-unit Po Tung Road site is a graveyard for restaurant businesses. Look at the failures this century: XTreme, Aguaplus, .COM and now The Diner.
We wish the Thompsons well. After stomaching their losses, we trust they will be back, a little wiser, with new investments — in other markets.
*This was confirmed by The Diner Central manager Michelle Riesgo. At Arbuthnot Road, it will now be the sole Diner in Hong Kong, at least for a while.
** The staff should find new jobs soon in Hong Kong’s ever-changing F&B market. Geraldine, Benny (who’s a girl) Jessica, the cook. Peter came from the Central Diner and may have gone back.