Alfresco Fiasco: A multi-party solution to outside seating strife

Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp

Hong Kong has a fine tradition of casual outside dining. Yet it has become a flashpoint for conflict in our communities. Restaurateurs, legal and extralegal, have tried to keep their customers happy while dealing with the regulatory requirements of the Food, Environmental and Hygiene Department and discombobulated residents. The latest combatant in the fray is the Hong Kong Ombudsman – and he’s not amused. Is he out to kill outside dining – or save it?


Rumbles On the Roads

The Food and Environmental Hygiene Department (FEHD) and their late night foot-soldiers, the Hawker Control Officers (HCOs), patrol the highways and byways of Hong Kong, seeking violators ranging from completely rogue pop-up restaurants to legal restaurants who may have a table leg out of place encroaching on public space.  They have various  tools and sanctions to encourage legal operators’ compliance and some latitude for discretion.

Someone thinks they aren’t doing their job.  The Ombudsman is on the warpath after small number of complaints have emerged from the public claiming the FEHD aren’t enthusiastic enough in their duties.  According to the Office of the Ombudsman:

“This Office has for years been receiving complaints (26, 37 and 48 complaints in the years of 2010, 2011 and 2012 respectively) from members of the public, including local residents and local representatives, against the Food and Environmental Hygiene Department (“FEHD”) and Lands Department (“Lands D”) about their lax enforcement actions against illegal extension of business area by restaurants.  Allegedly, the maladministration has led to the continual suffering of the complainants and their families on a day to day basis.  

In addition to the complaints that we have received, there have been media reports almost every week about restaurants in commercial and residential districts operating outside their permitted area.”

Rogue Restaurants Running Rampant?!

What FEHD officials are meant to be seeking are those in violation of their OSA – Outside Seating Accommodation – permits.  These are restaurants either serving food outside their licensed area or putting furniture or signs – ‘obstructions’ – in public space.  Take note – these are often not completely illegal operations, but legal operators with some elements in violation of their permits.

In recent years, the FEHD has stepped up their harassment of out of line vendors to some effect:

“the number of prosecutions instituted against licensed food premises for illegal extension of business area rose from 783 in 2010 to 1 350 in 2012. The number of suspensions or cancellations of licences of food premises resulting from illegal extension of business area rose from 126 in 2010 to 238 in 2012. The number of related complaints decreased from over 6 220 in 2011 to about 4 950 last year, showing that the enforcement actions are paying off.”

If official numbers are to be believed, complaints against the FEHD to the Ombudsman for non-enforcement have been rising – even as the FEHD has almost doubled their rate of levelling prosecutions and shutting down establishments.  There seems to be a mystery here.

What gives?

Who is Feeling the Heat?

Local Western style restaurant groups have banded together under the banner of the French and American Chambers of Commerce as they seem to be among those taking the heat.  Operators of upscale establishments like the Epicurean Group, Cafe Deco, the Press Room and King Parrot are allied to ‘enable in Hong Kong a rich and diverse Al Fresco dining scene equal to any world leading city.”  Even Hong Kong’s biggest landlord, Link REIT, has signed on along with the global Hotel group Novotel to their mini-lobby “Al Fresco Group”.  Not exactly a group of  restaurateur rebels.

Read the fine print and their concerns are about one thing:  Outdoor Seating Accommodation permits.  Itemising the difficulties they pose, proposing solutions to move them along faster and reforming the system of application.

This genteel, law-abiding group have professionals and lawyers to navigate the bureaucratic maze and yet feel the need to organise to reform the system.  Imagine how lower-end, scrappier vendors must feel.  A little set upon perhaps?

OSA:  Outside Supping Accessible?

This isn’t the first time Hong Kong has been down this road. Tommy Cheung Yu Yan, in a conversation with Harbour Times, explained he had been working on this issue with colleague Selina Chow since the 1990’s when he was with the Urban Council and in the 2000’s as a LegCo member. More recently, Henry Tang, in his 2006 budget address, set up a Business Facilitation Advisory Committee comprising members of the business community.  This group was meant to address government  practices that could be improved to facilitate business.  Enthusiasm for outdoor dining was official.  Mr. Tang specifically mentioned alfresco dining in his address as one of the areas they would tackle.  

And so they did.  The Efficiency Unit examined means of cutting red tape and improving the licensing process.  Times were tough. For four years preceding, only 403 applications had been received.  Only 144 were approved.

Now, things are barely better.  In 2012, only 104 applications were received  – and only 17 were approved.  Mr Cheung claims processing times are 16-18 months and applications are often abandoned due to their complexity and uncertainty.  Up to 8 departments must be dealt with separately, each having its own requirements, workflow and negotiators.  The sector supports 200,000 jobs in 12,000 restaurants.

People often lament Hong Kong’s paucity of outdoor dining compared to  competitors like Singapore and Bangkok. Official support seems to have faded away.  

Does a greater public desire suggest that the government should be more permissive in allowing operators to take some liberties in community dining?

OSA:  Ombudsman So Angry!

Our Ombudsman thinks not.  Mr. Alan Lai Nin’s recent report, Direct Investigation into Regulatory Measures and Enforcement Actions against

Illegal Extension of Business Area by Restaurants, calls for the FEHD to step up enforcement  of  ‘recalcitrant offenders’.   While the office of the Ombudsman does suggest the ‘Administration should encourage more al fresco dining,’ the majority of his report dwells on the shortcomings of the FEHD and Lands Department in enforcing the letter of the law.

Down in the Streets

There are three regulatory and enforcement bodies at play here.  The FEHD has Health Inspectors (HIs) that work from 8:30am to 6pm, Monday to Friday.  Plucky restaurateurs with mobile operations can easily set up operations outside their normal working hours.  The off-hour food soldiers of the FEHD are the brown-suited Hawker Control Officers (HCOs) who cover longer hours – 7am to 11pm over two shifts.

These two are responsible for ensuring non-permanent structures do not encroach out of their designated OSA perimeter.  

‘More permanent structures’ are dealt with by the Lands Department who ensure that government lands are not being occupied or used in an unlawful manner.

The Brand New Heavies

“The Ombudsman is going overkill on this.”

LegCo Member Tommy Cheung

The Ombudsman concern was that repeat offenders, well, repeated.

One oddity of the Ombudsman report that stands out to anyone who has looked at this issue is the lack of the term ‘OSA’.  It simply doesn’t appear in the report.

While the report notes that the FEHD has discretion to lay different charges for different offences, it seems to suggest that such discretion is misplaced.  

“Indeed, restaurants selling cooked food on Government land are no different from unlicensed itinerant hawkers selling snacks on pavements. Both are in essence illegal hawking activities in the street.”

This seems to suggest that established, reputable operators that might have a table out of place in a busy tourist area would be equated with a mobile food vendor selling mystery meat out of a street side fire-and-oil set up.  

Indeed, this author has seen at least one HCO exhibit that spirit, as she delivered an uncontrolled tongue lashing to a senior manager for a small out-of-place table from an upscale establishment.  However, an unlicensed street vendor who sets up after 11pm could be sure to operate unmolested.

Licensing – Mad Laws make for Mad Men

When so many are supposedly operating outside the law – operators and customers – one must question the law.   How well does licensing work in Hong Kong?

One of the peculiarities of the Hong Kong system is that application for restaurants and their Outside Seating Accommodation permits can be linked – or not.  The way in which it works positively encourages semi-legal behaviour.

Operators must receive approval from a variety of departments and be fully built out before receiving their FEHD approval for their restaurant to open.  Liquor licensing, an important revenue stream for many operators, follows only after that approval.  Any delays in the form of any government department or neighbourhood objection means months of lost revenue while rent bills are charged relentlessly.  Experienced operators are used to this and can navigate the system with some tolerance for a familiar frustration.  For new operators, it can be fraught with peril.  Even experienced operators reject investing in existing operations if their OSA is not secure.

However, once the final approval for the indoor operations is secured, then the OSA permit process can begin.  Once again, approval from multiple departments must be sought.  Once received, the District Council gets involved, making an assessment and decision.  Then the real trouble begins.

Community vs. Cranks

The community gets to weigh in.  In many cases, a single complainant can hold up approval for weeks or months.  When the time for a hearing comes, complainants almost never appear – meaning the delay was for nothing.  The whole process takes month after month after expensive month.

A single anonymous objection of a theoretical future problem is enough to hold up an application.  LegCo member Cheung cited truly discouraging examples.  Police objecting to possible future parking violations in an area where a double yellow line was already being enforced.  Residents objecting to possible night time noise when the OSA was to provide daytime lunch boxes to students.  Indeed, the Ombudsman report claimed “Applications were refused mainly because objections from the local community had not been properly resolved.“  But when a single objection about a hypothetical situation can scupper an OSA application, how do government departments distinguish between a legitimate concern and the neighbourhood killjoy unnecessarily raining on everyone’s  parade?

Streamlining or Sinking?

It seems like a good idea to allow approval of both the restaurant license and OSA to proceed together, since many of the same government departments are involved.  However, if the operator applies for them together and there is a problem with the OSA, it sends the whole application – for restaurant and OSA alike – back to the drawing board.

“Of course no one applies for them both together – the risk is too great.  After all, so few OSAs get approved,” explained Larry  Cowle,  a 10 year veteran of the business in Hong Kong and Director of Corporate Development of the Epicurean Group.  He has worked in Malaysia, The Philippines, Macau and China.

It becomes no surprise that so few are willing to apply up front and choose instead to offer outdoor seating in the hope they will be approved eventually.  The downside risk of making a joint application is crushing.  So is it worth the risk to operate an OSA in advance of actually receiving a permit?  What’s the downside?

Crime and Punishment

The Ombudsman report does identify the ‘downside’ as not having much down to it.  Typical fines range from $1,000HKD to $3,000HKD for obstruction (having materials in a non-designated area) and selling cooked food outside the OSA permitted area, respectively.

The Ombudsman also paints a dismal picture of a 3 tier appeal system that seems only to delay justice.  Precisely none of last year’s appeals met with success.  Some took almost a year to be thrice processed.  The Ombudsman reasons, if they are never successful, better to eliminate one of the levels and leave only two.  Furthermore, operators can, and do, stay open and in place during the appeals process.  

The FEHD’s zeal for prosecution also comes under fire.  The Ombudsman states, “Apparently, FEHD is concerned only about its frequency of inspections and number of prosecutions.”  It calls the department’s enforcement actions ‘superficial’.  That  is a surprising accusation given their rising enforcement numbers and operator frustration.  

It does imply that health inspectors may not be suited for the role of  enforcer,  allowing “We understand that arrest and seizure require considerable manpower and other resources, and such actions might lead to confrontation between the law enforcers and the restaurant staff and customers.“  One does not imagine food biologists specialising in E.coli counting would necessarily be the best equipped to tackle a rogue eatery full of rowdy Blue Girl bolstered patrons late night in Yuen Long.

The Ombudsman suggests that repeat offenders should not be granted licenses in the future.   He believes the system of granting ‘provisional licences,’ hailed as a significant improvement in 2008, instead allows repeat offenders to continue on unimpeded.  Rather than giving the repentant a chance to clean up, it allows them to carry on in violation of their OSA – if they even have one.

So What is Going On?

A picture begins to emerge.   Legitimate restaurant operators are bewildered by a licensing body that seems to make it deliberately difficult to get a license, forcing some operators into semi-legal status.   They actually care about staying on the good side of the law and feel harassed and set upon by FEHD HCOs who have to be seen  prosecuting someone – anyone.

Financial penalties don’t deter borderline operators desperate for revenue nor regular scoff laws. However, legitimate operators are tearing their hair out over harassment from low level employees who can’t really hurt them – just make a show of doing their job by harassing who they can.

The FEHD doesn’t stay up late enough to catch those that must be a real thorn in the side of local residents.  Without details on two score or so of complainants claimed by the Ombudsman each year. it is hard to know the details of the problem spots.  

Amnesty?  Coming in from the cold

Those operating in an extralegal or simply illegal manner for many years may have become a part of the local community and have legitimate claims to ‘squatters rights’ or traditional use of the land.  For these, one idea that has not yet been floated is that of having an amnesty to allow them to reach an accommodation with the FEHD and continue to serve their community with a legitimate OSA permit in place.  

Tommy Cheung believes more OSAs will lead to more compliance.  “The Ombudsman is going after people who do not have OSAs and illegally put  their tables up.  This is purely my point.  If  you license them and regulate them,  obviously they [the operators] will do something about noise levels, they will do something about not putting too many tables out there.  If you don’t  license them and force them to do something illegal, obviously things will go from bad to worse.”  He suggested the OSA permit numbers were declining rapidly, reducing the number of operators in the legal ambit.

But the FEHD must be seen to be reacting to the concerns of the Ombudsman.  The legitimate operators catch the fallout.  With HIs and HCOs that need to get their numbers up, ideally without getting abused by real outlaws in the middle of the night, easy targets bear the brunt of their need to hit their numbers.

So while prosecutions and closures of alfresco options rise, enforcement against real problem spots goes unchecked and complaints to the Ombudsman rise.  The mystery of the rising numbers is solved.

OSA Reform: A Must

As mentioned, the Ombudsman does not refer to the licensing system once in his report.  And yet, it has to be the start of the solution.

The misperception that there is a problem with legitimate alfresco dining, a source of enjoyment, jobs and tourism revenue to Hong Kong can be fixed if all players can do their jobs properly.

This would mean implementing 5 year old recommendations to bring Hong Kong’s licensing system up to par with Singapore’s, centralising application approvals into one department  – not spreading them across 8.  Speed and certainty in the application process would reduce the need for months of paralegal operations while vicarious licensing deliberations dragged on.

It would mean decoupling the success of a simultaneous restaurant and OSA application.  Then,  if the OSA was rejected, it wouldn’t  mean the end of the restaurant application.  The restaurant could still be approved while the OSA was re-applied for post-modification of the area.  The operation could proceed, albeit with reduced revenue.

It would mean empowering the FEHD to deal with real late night problem operators with police support.  Not the expanded HCO hours, but rather around the clock operations with proper muscle to clean up black spots.

Curing Community Concerns

Tommy Cheung believes one thing that has changed is the ability to request evidence  from community members raising concerns.  The advent of smartphone video means that  if people have a genuine, recurring issue, they should be able to capture the evidence  with little difficulty.

He cited the issue of a problem years ago in Yiu Wah Street where video  evidence clearly showed a problem with luxury sports cars and loud people at 3:00am.  Confronted with the evidence, the operators solved the problems and complaints stopped.

“They should go ahead and issue OSAs…  Let it run for six months and if they really cause a nuisance…then they should be warned.  They [restaurateurs] should rectify it [the problem] or be taken out!”

Anonymous, theoretical, and frivolous complaints should be ignored.   Rather than “Innocent until proven guilty”, the current system is ‘guilty if accused, even if you aren’t open.”   This serves neither community nor customers.

Reforming FEHD

It would also mean continuing to allow the FEHD discretionary powers to tell the difference between someone who needs a week to move tables around or clean up liquid runoff versus a repeat offender.  Fines with some real bite could allow the FEHD to deal with serious troublemakers and leave legitimate operators alone to take care of customers and help Hong Kong thrive.

This may require dividing the FEHD into an efficiency maximising, centralised licensing bureau and a tough, round-the-clock enforcement division to deter those real outlaws outside of the system.  No doubt FEHD staff would be happier with clear rules and goals that encourage the industry and community to become collaborators, not antagonists.

Tough Love: A Clever Gambit?

Perhaps the Ombudsman knows that by dropping a heavy hammer and then stonewalling about details, he will provoke parties to come to a solution.  He has only moral authority.  He cannot compel the FEHD nor Lands Department to do anything.  His actions can create awareness and certainly have done so in this instance.

The rising tide of complaints to  the Ombudsman, while small, have almost doubled in two years.  Left unchecked by an under-resourced FEHD, legitimate alfresco operators have borne the brunt of public dissatisfaction with troublesome operators.   Prosecutions, licence suspensions and complaints were rising dramatically before the Ombudsman stepped in.  There could be more to come.  

An FEHD enforcement unit that stayed up past midnight, had sanctions with bite and enjoyed police back-up could deal with black spots. A leaner centralised licensing body could allow genuine operators to succeed legitimately in business.  Jobs would be created, tourists attracted and Hong Kongers allowed their time-honoured tradition of enjoying an outdoor meal with family and friends.

The Ombudsman has used his moral authority to appear to hammer down on alfresco dining.  But maybe, just maybe,…maybe he is trying to save it.