TASTY Congee & Noodle Wantun Shop, a Hong Kong eatery, this month won a place in Michelin's inaugural Hong Kong dining guide. Come January, the restaurant will offer its signature noodle dish for HK$1 (13 US cents) to recession-hit lunch customers.

Tasty Congee is one of a dozen food outlets that agreed to sell wonton noodles, barbecued pork, egg tarts and other meals for HK$1 in a two-month promotion organized by the Hong Kong Federation of Restaurants and Related Trades. The group hopes the meals will stop customers from switching to home cooking to save money, said Chairman Lok Kwok-on.

"The situation is so bad," Lok said in an interview with Bloomberg News. "We have to do whatever we can to save ourselves."

Hong Kong's HK$70-billion catering industry faces the city's first recession in five years. The economic outlook is worse than during the 1997 Asian financial crisis and the 2003 epidemic of Severe Acute Respiratory Syndrome that kept consumers off the streets, said Alice Hui, a Hong Kong-based analyst at DBS Vickers Securities Holdings.

"People will immediately cut their spending when dining out," Hui said. "Caterers will no doubt be severely affected as some (customers) may even take to eating at home instead."

By Thursday, Hong Kong's stock market had lost 47 percent of its value this year, while home prices had declined by almost a third from a five-year high in March. Companies including HSBC Holdings and Television Broadcasts Ltd are axing jobs, sending the unemployment rate to the highest level since November 2007.

Bib Gourmand

Michelin's inaugural Hong Kong and Macau guide this month gave three stars to two restaurants -- Robuchon a Galera and Lung King Heen. Tasty Congee was one of 26 eateries listed in the Bib Gourmand section for good-value meals under HK$300.

Restaurant receipts may fall by HK$10 billion to HK$60 billion during the recession and 500 restaurants in the city may have to shut down, said Michael Chan, chairman of Cafe de Coral Holdings, the biggest listed Chinese fast-food chain.

Hong Kong's government on November 14 cut its forecast for economic growth this year to between 3 percent and 3.5 percent from a previous estimate of 4 percent to 5 percent. Chief Executive Donald Tsang this month told the 7 million people in the city that a recession in 2009 is "inevitable," and the next 12 months would be very difficult.

Chan has predicted Cafe de Coral's growth will slow following a 15-percent gain in first-half profit.

Still, he's betting cheaper establishments won't suffer as much as high-end restaurants. Cafe de Coral is pushing ahead with a plan to open 50 stores this fiscal year, of which 37 have already opened.

Fast Food Expansion

Fairwood Holdings Ltd, which also offers Chinese fast food, opened four outlets in the six months ended September, bringing its total to 92. It wants to expand to 100 outlets in Hong Kong and 40 in Chinese mainland by 2010.

"People are trading down and we're capitalizing on that," Tim Fenton, regional president for McDonald's Corp, said in an interview with Bloomberg Television in Hong Kong last month.

Revenue of Hong Kong eateries fell an average of 10 percent in November, the industry group's Lok said.

"Few parties and cheaper bills cut our restaurants' receipts by 15 percent after the breakout of the financial crisis," said Brenda Ho, a public relations manager at Lan Kwai Fong Entertainments. "Our Christmas and New Year's Eve dinner bookings have only been filled 50 percent so far, compared with last year's 80 percent."

Lan Kwai Fong

The gourmet group runs 11 restaurants and bars in Hong Kong's Lan Kwai Fong, a nightlife area popular with expatriates and tourists. The caterer is offering a 10-percent discount for early bookings of Christmas and New Year's Eve dinners.

Tasty Congee will offer 100 bowls of noodles at HK$1 for three days in January. "I hope customers will order other dishes," said Joan Lee, a manager at Tasty Congee. "Or we can't even get back our costs."

Lok, who is also chief executive of karaoke chain California Red, is offering customers a buffet dinner for HK$1 from December 3 to 18.