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Thursday, Feb 09, 2023

This Hong Kong Restaurant Group Wrote the Playbook For Survival

"We’re no longer a restaurant team,” said Black Sheep co-founder Syed Asim Hussain. “We’re a scrappy food delivery company.”
In April, Hong Kong’s Black Sheep Restaurants released a COVID-19 handbook that went viral.

The 20-page guide, which goes over sanitation procedures, health protocols, readjusting economics, guest relations, and much more, is now available in English, Chinese, Japanese, French, and Spanish. Black Sheep co-founder Syed Asim Hussain is proud that the handbook has been read so widely, even outside of the restaurant industry, by people in academia, fashion, and travel.

But there's been a lot more to figure out in the months after the guide was published.

Hong Kong continues to battle the pandemic. Black Sheep has had to suspend dine-in dinner service three times. Revenues are down about 80 percent at the company, which has 27 restaurants and more than 1,000 employees. But there hasn’t been a single layoff.

“The greatest achievement of my life is keeping everyone on the team so far,” said Hussain, who is 35 and has two restaurants with Michelin stars. “I’ll try to keep it like that for as long as I can. They’re my people. They built this on the front lines with me.”

Employees at Black Sheep, which had already seen declining business prior to COVID-19 because of social unrest in Hong Kong, are working for reduced salaries. Hussain didn’t pay himself for a few months this year because “there wasn’t money to take.” He knows that “there has been a lot of financial pain that everyone within the Black Sheep community has shared.” But this is better than a scenario where his restaurants and the jobs they provide start disappearing.

One big reason Black Sheep has survived? It uses its own app for delivery orders. The restaurant group had started working on the app two years ago “out of spite” because Hussain didn’t want to pay 30 percent or more of his menu prices to delivery services that are “akin to profiteering.”

Hussain freely admits that the technology for Black Sheep’s app is clunky (he says he paid some developers, who might have been working out of their mom’s basement, $4,000 to build the app). But the app has been a lifeline for the restaurant group. And Black Sheep plans to spend $250,000 developing a new app.

“I keep telling everyone within the Black Sheep world that we’re no longer a restaurant team,” Hussain said. “We’re a scrappy food delivery company.” Every employee is working on delivery; even the design team has leant a hand packing pizza boxes.

Black Sheep has a fleet of 20 motorcycles, five bicycles, two delivery vans, and five cars. Hussain has been making deliveries himself, on foot and in a car.

“Last night I was doing deliveries with our CFO,” Hussain said. “I ran into a very important Black Sheep guest, and they were stunned. I’m sure they were thinking, ‘Things must be really bad if he and the CFO are doing deliveries.’”

But there’s no shame in scrambling to save your business in 2020. Black Sheep, which is known for high-end dining, is also willing to have its staff create private dinner experiences at somebody’s home. The company has also launched a meal plan called Supper Cult, which delivers dinner five days a week from different restaurants.

“The good thing is we can keep you interested for a while because we have 27 restaurants, 17 unique cuisines,” said Hussain, a Hong Kong-born Pakistani. “So I can send you Vietnamese on Monday and Italian on Tuesday and French on Wednesday.”

Black Sheep’s portfolio also includes New Punjab Club, which in 2018 became the world’s first Michelin-starred Punjabi restaurant. At New Punjab Club, chef Palash Mitra cooks lobster, lamb chops and cauliflower inside restored tandoor ovens from The Mughal Room, a Hong Kong restaurant that was run by Hussain’s father. Black Sheep has another Michelin star at neo-Parisian bistro Belon, which will soon be changing locations with a menu from newly hired chef Matthew Kirkley, who got three Michelin stars at San Francisco’s Coi.

So despite its current struggles, Black Sheep remains ambitious as it looks toward a brighter future.

“Restaurants are more than a place where people go eat food and drink drinks,” Hussain said. “They become a cornerstone and are what neighborhoods are built around. People really miss restaurants. One thing we’ve seen is that as soon as things start settling down, there’s a rush to come back to restaurants.”

This pent-up desire for dining inside a restaurant is something other operators have experienced in Asia.

“I’ve been doing a lot of talks and panels,” Hussain said. “I chuckle every time someone talks to me about the demise of brick-and-mortar restaurants. This is not the end.”

Hussain previously lived in New York and worked in finance. He returned to Hong Kong because he felt like a dining room was where he belonged. Black Sheep was founded in 2012. Its first restaurant was an outpost of New York’s Boqueria. That’s the only Black Sheep restaurant that has ever closed permanently. The space turned into Argentinian steakhouse Buenos Aires Polo Club in 2016.

Hussain’s restaurants also include two outposts of New York’s Motorino, as well as a Carbone. This is in addition to restaurants that serve Chinese, Japanese, Thai, Sri Lankan, Lebanese, Greek, Mexican, Anglo-Indian, and American diner food, among other cuisines.

Black Sheep has also turned one of its restaurants into a staff canteen. Employees are offered two meals a day, including a meal they can take home after dinner service, and the company recently contacted the Feeding Hong Kong food bank about sending hundreds of meals a day to refugee and asylum centers. The food bank is in the process of coordinating this.

“This is a prosperous city, but there are still 20 percent of people in Hong Kong that live below the poverty line,” Hussain said. “I think amidst all the chaos, we’ve forgotten about people living under that level.”

Hussain’s been telling friends about a recent Bloomberg interview in which he was asked whether he saw the need to make a decision about “rightsizing” at Black Sheep. He’s been thinking a lot about that question and how the word “rightsizing” doesn’t sit well with him. If he wanted to be in a business with better margins, he would have stayed in finance. He’s in hospitality for the romance and the sense of community and the feeling you get when you make people happy.

“If we were more pragmatic, we wouldn’t be doing this in the first place,” he said.

But Black Sheep is here and has established itself as an industry leader that implemented temperature checks and health-declaration forms more than a month before they were mandated. Black Sheep was then invited to be on an advisory panel that has given Hussain access to input from doctors and economists.

He’s had a lot of information to process recently, and now he wants to share something he deeply believes.

“I just want to say as loudly and clearly as possible that this is not the death of restaurants,” he said. “Restaurants are going to come back. Look, things are going to be different for a long while. For example, physical distancing is here to say. But you can’t replace the magic of coming to a restaurant with getting a box delivered to your doorstep.”

The plan, of course, is for this scrappy delivery company to pivot back into being a restaurant team.

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