Total revenue for the half-year to the end of September rose by 4.3 per cent to HK$3.89 billion (US$501.5 million) for restaurant and catering group Cafe de Coral Holdings.
Net profit, at HK$232 million, was up 11.8 per cent, while profit attributable to shareholders rose similarly to HK$3.89 billion, according to its interim results.
With stronger momentum in the fast-casual and casual-dining sector, the group says its quick-service restaurant (QSR) and institutional catering business continued to achieve encouraging results and steer further expansion.
“Mainland China business persistently improves its profit margin with a lower break-even point, which has laid a solid platform for expansion,” says the group. “The positive results demonstrate not only the capable stewardship of our new management team, but also the successful completion of the group’s succession plan.”
“Encouraging” revenue and same-store sales growth resulted in a robust and stable performance for the group’s (QSR) and institutional catering business.
In China, revenue stabilised for its fast-food business, thanks to updated menus.
Overall, the group’s QSR and institutional catering business in Hong Kong reported solid revenue gains, up 7.7 per cent. Same-store sales under the Cafe de Coral fast-food and Super Super Congee & Noodles grew 5 and 4 per cent respectively. As of September 30 the group had 288 QSR and institutional catering outlets, including 160 Cafe de Corals, 47 Super Super Congee & Noodles shops and 79 Asia Pacific Catering outlets.
Strategic tenancies
To speed up its expansion of the Cafe de Coral network, the group took advantage of the softer leasing market to take up tenancies at strategic and prime locations. Four outlets were added, with 11 more set to open. Seven more Super Super Congee & Noodles shops were added, with eight openings scheduled.
Asia Pacific Catering renewed all major contracts while Luncheon Star continues to be the leading provider for schools.
For its fast-casual and casual-dining sectors, the group saw 14.4 per cent revenue growth. Its catering-inspired Shanghai Lao Lao brand has evolved into a popular chain with eight outlets, says the group. Two of the outlets opened during the six months, with four more scheduled.
Encouraged, the group says it will aim to scale up Mixian Sense to provide another lucrative revenue stream.
Meanwhile, it is rejuvenating its Western-style brands, The Spaghetti House and Oliver’s Super Sandwiches. Decors and menus are being revamped.
Launched last year, its Japanese and Korean-style franchise restaurants are still in the investment stage.
Non-performing outlets in eastern and southern China have been closed, plus the management team has been localised as well as menus being revamped.
Same-store sales from the fast-food business grew by 1.2 per cent with “remarkable profit improvement” on the mainland even after excluding the effect of new VAT rules and despite the segment revenue falling by 16.3 per cent. This was mainly a result of the strategic closure of non-performing stores.
“While the imminent outlook is less than promising, the group remains confident its businesses will continue to fare reasonably well. Fortunately, our core QSR and institutional-catering segments, in particular, are relatively resilient to downturns.”
