Intense competition has impacted on Hong Kong-headquartered Japanese fast casual restaurant operator Ajisen Holdings sales, especially in the mainland.
Ajisen operates 662 restaurants in Greater China, including 37 in Hong Kong, specialising in ramen noodle soup. While official Mainland China government statistics show an increase in restaurant sales of 6.6 per cent in the first half of this year, Ajisen sales for the period dropped by 11.1 per cent, to HK$1.395 billion.
“Affected by competitors who newly entered into the industry, the scope of the catering market keeps expanding,” Ajisen noted in its stock exchange filing. “However, the increase of new competitors is slowing down. According to data from Dianping.com, growth of the catering industry in the four first-tier cities – Beijing, Shanghai, Guangzhou and Shenzhen – were within 10 per cent in the first half of 2016, far below the 50 per cent growth throughout last year.” Ajisen was also impacted by the growing popularity of three takeout platforms ele.me, meituan.com and Baidu Takeout Delivery, however it notes discounting and promotional activities by the group has now “faded away”. It is working closely with all three delivery platforms to boost its takeout sales.
“Faced with the on-going competition pressure and the downward macro economy, the management of the group proactively explores and seeks for approaches for… transformation.”
It is also looking to expand its take-out only stores and is open to acquisitions to broaden its  business base.
In the six months to June 30, Ajisen Holdings reported a fall in gross profit of 9.8 per cent to about $987.9 million.
During the period, it focused on streamlining its store network, resulting in a net reduction of two stores, but deepening the density in its more mature markets, such as Beijing, Jiangsu, Zhejiang and Shanghai.