Tao Heung sales improved as visitors increases
In this article (5)
Corporate restaurateur Tao Heung is reporting improved sales in both its core Hong Kong market and on the mainland as people dine out more often and the average tab increases.
Tao Heung operates 60 restaurants under its own brand, two RingerHut eateries focused on non-Chinese cuisine, and 18 Tai Cheong Bakery stores.
In the half-year to June 30, consumption sentiment improved both in Hong Kong and Mainland China, the company said. Its strategy to strengthen its culinary portfolio to attract a more diversified customer base, and right-size its operations led to a 5.4 per cent increase in year-on-year sales to HK$2.08 billion.
“The increase was principally driven by same-store sales growth, in turn the result of the rise in per-head spending particularly for seafood and including late night dining – “all you can eat hotpot”,” the company said in its results commentary.
Profit attributable to shareholders rose to $51.3 million (from $40.8 million in the same period last year) and would have been up by 53.7 per cent to $62.7 million had it not been for a one-off expense relating to the government-enforced closure of the company’s pig farm during the period.
In Hong Kong, which accounted for 61.7 per cent of the company’s sales, the company says it faced “fierce competition” rebuffed by several seasonal marketing strategies. “All these helped to further drive same-store sales growth as well as increase per-head spending.”
Eight Hong Kong restaurants were renovated during the six months, including Tao Heung – The Pier Market Store in Mong Kok which opened in June, specialising in seafood. It is targeted towards affluent customers – “a segment that not only appreciates fine Chinese cuisine but also a suitably sophisticated ambience”. Other restaurants were either closed or right-sized, leaving a net reduction of six outlets since the end of last year.
As the company looks to diversify its restaurant portfolio, several collaborations were realised, with more partnerships in the pipeline. Du Hsiao Yueh, which specialises in Taiwanese cuisine, which opened its first Hong Kong branch in Tsim Sha Tsui in June last year, now has a sister restaurant in Causeway Bay. Another collaboration involves Flamingo Bloom, a modern, chic Chinese tea salon that opened at IFC mall in July.
“All these helped to further drive same-store sales growth as well as increase per-head spending.”
“Management trusts that such collaborations will not only broaden the group’s portfolio, but also provide it with greater flexibility in terms of business development,” the company said.
Tao Heung is also exploring overseas partnership opportunities for its Tai Cheong Bakery, after achieving success in Singapore.
“Besides consolidating its bakery network, further efforts will be made at increasing distribution channels through collaboration with different brands and supermarkets.”
Mainland China operations
On the mainland, the group operates an integrated complex business model, comprising Chinese restaurant, self-owned supermarket, indoor playground, museum, shops and parking facilities covering over 22,000sqm. The company said the three family-oriented complexes it operates continued to deliver stable income during the period, attracting the patronage of middle-to high-income families.
The company’s packaged food business on the mainland also experienced strong growth. Sales of frozen food increased by 26.3 per cent, largely due to e-commerce partnerships with online platforms such as Tmall.com and JD, which give the group access to customers nationwide. Takeout services like Dianping.com, Meituan and ele.me also boosted sales.
As at June 30, Tao Heung operated 46 restaurants in Mainland China, along with 26 Bakerz 180 outlets during the period.
Questions & Answers
Q.What initiatives did Tao Heung undertake in Hong Kong to combat competition and drive sales growth?
What initiatives did Tao Heung undertake in Hong Kong to combat competition and drive sales growth?
In Hong Kong, Tao Heung employed several seasonal marketing strategies to counter fierce competition. They also renovated eight restaurants, including The Pier Market Store in Mong Kok, which specialises in seafood and targets affluent customers.
Q.What was the primary driver of the increase in Tao Heung's year-on-year sales?
What was the primary driver of the increase in Tao Heung's year-on-year sales?
The principal driver for the sales increase was same-store sales growth. This resulted from a rise in per-head spending, particularly on seafood and late-night dining options like 'all you can eat hotpot'.
Q.How did Tao Heung manage its physical store network during the reporting period?
How did Tao Heung manage its physical store network during the reporting period?
The company renovated several Hong Kong restaurants, including opening a new seafood specialist in Mong Kok. Other outlets were either closed or right-sized, leading to a net reduction of six outlets since the end of last year.
Q.What is Tao Heung doing to expand its portfolio and reach new customers?
What is Tao Heung doing to expand its portfolio and reach new customers?
Tao Heung is diversifying its restaurant portfolio through collaborations, such as opening sister restaurants for Du Hsiao Yueh and the new tea salon Flamingo Bloom. They are also exploring overseas partnerships for Tai Cheong Bakery and increasing distribution channels for its bakery network.
Reader pulse
Is Tao Heung's strategy effective?
19,832 votes so far