Hong Kong-listed restaurant group Cafe de Coral plans to continue to expand in the Greater Bay Area of Mainland China as it seeks to mitigate lacklustre sales in its home market caused by pandemic-related restrictions on cross-border movements and social distancing.
The company recorded a profit attributable to shareholders of US$46 million (HKD359.1 million) in the year to March 31 – about five times that of the preceding year – largely due to Covid-related subsidies from the Hong Kong government and concerted management focus on identifying new business opportunities while reducing costs.
Revenue for the year fell from US$1 billion in FY2020 to $865 million this year. The group said it received pandemic relief and subsidies from governments totalling $82 million, about two thirds of that from the Employment Support Scheme of the Hong Kong government, which was used in its entirety for paying salaries and wages to employees.
Cafe de Coral operates casual-dining restaurants under the Shanghai Lao Lao, Mixian Sense, The Spaghetti House and Oliver’s Super Sandwiches brands as well as fast-food chains under the Cafe de Coral and Super Super Congee & Noodles brands, and an institutional catering business.
Chairman Sunny Lo said the company countered long dine-in restrictions at its restaurants during the pandemic by accelerating investment in technology to capture more takeaway and delivery business.
“These measures, combined with relaxed social-distancing restrictions, led to improved revenue in the second half of the financial year.”
While the group’s operations in Mainland China were heavily impacted by the initial stages of the pandemic, it said the subsequent recovery was relatively quick. Taking advantage of its underlying financial strength and confidence in the Greater Bay Area market, Cafe de Coral opened 13 stores on the mainland during the year with its network standing at 121 stores as of March 31.
“Building on a solid foundation in Hong Kong, we will continue to tap into significant growth opportunities in the Greater Bay Area – creating sustainable value for our investors, partners, customers and staff,” said Lo.
“The group will actively seek to penetrate residential areas in Tier 1 cities, while expanding our presence in Tier 2 and 3 cities.”
Seventeen more fast-food stores are slated to open in the region during the current financial year.