Cafe de Coral grows revenue, profit, outlets
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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.
“Mainland China business persistently improves its profit margin with a lower break-even point, which has laid a solid platform for expansion,”
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.”
Questions & Answers
Q.Which specific segments contributed most to the overall revenue growth for Cafe de Coral Holdings?
Which specific segments contributed most to the overall revenue growth for Cafe de Coral Holdings?
The group's Quick Service Restaurant (QSR) and institutional catering business in Hong Kong reported solid revenue gains of 7.7 per cent. The fast-casual and casual-dining sectors also saw significant revenue growth of 14.4 per cent.
Q.How did Cafe de Coral take advantage of market conditions to expand its Cafe de Coral network?
How did Cafe de Coral take advantage of market conditions to expand its Cafe de Coral network?
The group capitalised on a softer leasing market to acquire tenancies in strategic and prime locations. This strategy allowed them to add four new Cafe de Coral outlets, with 11 more planned for opening.
Q.What measures has the company taken to improve the performance of its businesses in Mainland China?
What measures has the company taken to improve the performance of its businesses in Mainland China?
The group has closed non-performing outlets in eastern and southern China, localised its management team, and revamped menus. These actions led to improved profit margins despite a fall in segment revenue.
Q.How many new outlets were opened across all brands during the six-month period?
How many new outlets were opened across all brands during the six-month period?
During the six months, four Cafe de Coral outlets, seven Super Super Congee & Noodles shops, and two Shanghai Lao Lao outlets were opened. This totals 13 new outlets across these specific brands.
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