Cover Manuel Palacio, co-founder, Pirata Group

Co-founder Manuel Palacio reveals how his restaurants have adapted to the new normal, the secrets to the Group’s success, and why retail, not delivery, is the future

When Pirata Group recently announced that it would open another six restaurants and points of service before the end of the year on top of the four it has already launched in 2021, it was almost as if a global pandemic had not been raging for the last 18 months.

To date this year, Pirata has opened Pane e Latte in Stanley, TMK Rap & Rolls in Wan Chai, and Pici outlets in Kennedy Town and Shanghai. Still to come are Pici in Tseung Kwan O, a delivery kitchen in Kowloon Bay, and The Sixteenth in Quarry Bay, a four-in-one concept spanning 18,000 square foot and incorporating Italian trattoria La Favorita, terrace bar Tempo Tempo, temakeria TMK Funk & Rolls, and sushi joint Honjokko.

While Covid-19 has, of course, presented challenges, there have also been plenty of opportunities, which the Group has grabbed with both hands. Co-founder Manuel Palacio expounds Pirata’s recent past relating to the protests and the pandemic, its present expansion and its exciting plans for the future.

How did the dining scene change for you when Covid hit and how did Pirata’s restaurants cope with its impact?

The first change was behavioural. Dining became much more lunch driven. Weekend brunch became the new Friday night. And we became more of an experience; restaurants became more experiential. We saw soft weekdays and strong weekends and early dinners versus late dinners. Now, it’s not rare to see people come for dinner at 5pm, whereas previously no one would show up before 7pm.

As we started to understand the behaviour, we decided to transform. We turned our restaurants into all-day dining restaurants. We understood that people would finish a little earlier and we decided to give the opportunity to our teams to do a straight shift. So, now we open from 12noon to 10pm without closing in the afternoon, so we no longer need to serve guests at 11pm or midnight, and everyone can have an early finish.

We also had better deals with suppliers, including better payment terms and pricing because suddenly everyone was in the same boat. Suppliers, restaurants and landlords were all trying to get out of the pandemic together; it was refreshing to see everyone suddenly on the same side.

Do you think these changes are here to stay post-pandemic and are they specific to Hong Kong?

I think a lot of things are here to stay. People are getting used to a different lifestyle. I compare the way Hong Kong is behaving now to LA, which is more of a daytime-driven city. At 1 or 2 in the morning, there is no business to be done, but in exchange you have a very lively daytime lifestyle. And you can see that here with concepts like Pane e Latte—people are appreciating breakfast and coffee and all-day dining under the sun, which is fantastic.

A lot of the changes are also happening in New York and Europe, but I think the pandemic is going to transform the Hong Kong dining scene for the better. Hong Kong has always been one of the most dynamic and interesting cities, but London and New York have been leaders. Now, however, they are both losing strength. Hong Kong has all the ingredients for an amazing dining scene. We have access to talent and product, it’s a good city to live in, and the clientele really understands. Hongkongers are always looking for a new experience. All this makes Hong Kong almost a perfect city for F&B.

What has allowed Pirata to be so resilient and to continue expanding in these challenging times?

Irresponsibility and optimism—a little of both! The protests were very tough. They started in June, when I opened three restaurants—Pici Lai Chi Kok, Honjo and TMK—all of which were empty. At the same time I had two restaurants on Hennessy Road (The Optimist and Pirata), right in front of the protests, and one new Pici in Shatin in the mall where protests took place. When the pandemic hit, we were prepared for the worst. We had time to look into the things that were not working because we had been running very fast. We took the opportunity to look at our culture, to look at financing, to reorganise the way we are structured, before we started growing. It has been an 18-month shift to put us in the position to say, we are now very strong, there are a lot of opportunities in the market, and our staff really want to go for it.

What makes your restaurants, particularly Pici, a concept you have repeated many times over, so successful?

I think the success of Pici is 80% luck. We were lucky to have the right concept at the right time. It’s also down to simplicity, consistency and quality. Pici has allowed us to do what we love, which is restaurants that are different. Pici is what we call the cash cow—it allows us to take risks on other restaurant concepts because at the end of the day, if that restaurant doesn’t work, Pici is going to pay the bill. It’s a good luxury to have.

You have also expanded into Deliveroo kitchens—why?

Personally, I do not love the idea behind the delivery business. We are in the business of experience, not the business of food. But it’s what we call a necessary evil. No restaurant really makes money out of delivery. A regular restaurant is a vertical integration—the chefs cook the food, a waiter delivers, the guests enjoy, they pay and everything takes place in the restaurant. With delivery you have three partners for the same amount of business, or perhaps less because you don’t have drinks—there are drivers, a technology partner and restaurants, and we need to make money out of a smaller cheque. The only way is to do business that is strictly for delivery, which is why we started building delivery kitchens. When there’s a wave, we can shift our staff there and start making pizza and pasta until the wave goes. Most of our restaurants are not on Deliveroo – it’s Chaiwala, because Indian food travels well, Pici and The Pizza Project. We tried others but delivery didn’t do them justice.

Deliveroo kitchens also give us the opportunity to try different markets and assess the appetite. We opened our first delivery-only kitchen in Quarry Bay, where we will open Pici. Then we went to Tuen Mun where we are now looking for a space. We will also open in Kowloon Bay to test the water there. Once we open bricks and mortar, we close the delivery kitchen.

Do you see yourself staying in delivery long-term?

No, because we only want to do things that we love doing. The reason we do restaurants is because we like to see people smiling. That was the reason we opened our first restaurant. When it’s delivery, I cannot see and cannot affect the experience of a guest.

Why did you decide to expand to Shanghai earlier this year?

The opportunity came up and we thought, okay, we cannot travel, but our food can, so why not try it? And it’s been fantastic. We wanted to try a new market and see if Shanghai has the appetite for what we are doing. Pici was the easiest concept, and potentially we can grow it there and at a later stage go with other concepts. But we are far from saying we are going to grow to 20 restaurants in Shanghai; we have to remain humble.

Do you have ambitions to grow elsewhere in Asia?

Ambitions? No. Are we dreaming? Yes. We would dream to keep on spreading smiles. The ultimate dream would be Japan, though I’m not sure it makes commercial sense. The one that makes the most sense is Singapore, because it’s a very similar market, but other cities could be very interesting, such as Bangkok and Seoul. But I always say we will look three months post-pandemic, whether that’s in one year or two. Until then, we are focused in Hong Kong. We love this city and we are so excited about discovering different neighbourhoods. Our best performing restaurants right now are Pici Shatin, Pane e Latte in Stanley, Pici in Tsim Sha Tsui and The Optimist in Wan Chai. That was unthinkable a few years ago as before it was always Central. Now we want to explore and do more cluster concepts to really build an experience and to invest into an area.

What does 2022 hold for you and Pirata Group?

In 2022, we will have minimum 10 new restaurants—some new concepts and some replications. We are also exploring the concept of retail. I think retail can be questioned and done better, and I think we will see a lot of F&B touching on retail. I don’t think the future is delivery; I think it’s retail done by F&B. It’s making retail more of an experience and having someone who understands the products.

We will also focus on vertical integration within the company. This year we integrated branding and interior design because we wanted to have a lot of personality in our concepts. Pane e Latte and The Sixteenth have all been designed in-house and they have a very particular style. We don’t want to use the same designers as everyone else.

Most importantly, we want to do things we will have fun with. We will take some risks but as long as one third of our restaurants is Pici or The Pizza Project, that allows us to do anything we want and to make mistakes with the others. 2022 is very exciting, regardless of whether the pandemic is still here or not.

Related: The Sustainability And Ideas Reshaping Hong Kong's F&B Industry