Lower sales hit first-quarter profits for Japan Foods, the parent of Ajisen Ramen.

A net profit of S$1 million (US$730,000) for the three months to the end of June came on the back of $16.2 million in sales at 44 restaurants. This was down from a profit of $1.3 million from revenue of $16.8 million from 49 outlets for the same period last year.

Although gross profit dropped 3.2 per cent to $13.8 million, gross profit margin improved 0.5 points to 85 per cent thanks to the group’s product-pricing strategy as well as its continuing cost-control efforts.

During the quarter, the group was able to recognise its share of profit from Highly Yield, an associated company running restaurants in China under the Menya Musashi brand, as the franchise expenses were fully amortised.
Japan Foods’ flagship brand and main revenue generator Ajisen Ramen had a 9.7 per cent increase in sales to $6.8 million for the quarter as a result of two openings, at Compass Point in September last year and Bedok Mall in March.

Higher net sales were also generated from some existing branches, and the increase was tempered by the closure of the restaurant at Bedok Point in March.

Slight sales increases were recorded by the group’s other flagship brands, Menya Musashi and Osaka Ohsho – up $200,000 to $3.6 million, and up $210,000 to $2.1 million respectively.

However, the increase in revenue by the three flagship brands was partially offset by a $1.5 million drop in sales for the group’s other brands from $5.2 million for the quarter last year to $3.7 million for the latest quarter. This was a result of stores being closed following lease expiries, namely under the Botejyu, Hanamidori, Kazokutei and New ManLee Bak Kut Teh brands. There was also lower revenue from the Dutch Baby Cafe, Fruit Paradise and Ginza Kushi-Katsu restaurants.

Overseas, the group’s network increased from 19 to 20 restaurants, in China, Hong Kong, Malaysia and VIetnam.

Japan Foods launched its Shitamachi Tendon Akimitsu concept at Plaza Singapura last month.