Turnover dips as Ajisen (China) under pressure
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While half-year turnover edged down 2.5 per cent for restaurant group Ajisen (China) Holdings, its core profit grew 36 per cent.
Its turnover was RMB1.1 billion (US$165.2 million) while the profit reached RMB135 million.
Gross profit margin, up 2.3 points, was 73.1 per cent, while the gross profit reached about RMB841 million, up 0.7 per cent. Profit attributable to the owners of the company fell by about 80.9 per cent to RMB108 million.
Ajisen says competition in the foodservice industry has intensified, with high opening and closing rates emerging as the new norm. As an example, it cites a surge of new restaurants in Beijing, Shanghai, Guangzhou and Shenzhen being accompanied by a higher rate of take-over with a monthly closure rate of 10 per cent, and a compound annual closure rate exceeding 100 per cent.
Also the shopping centre/catering model is under pressure, says the company, as a result of lower flow aggregation and insufficient customer numbers because of the homogenisation of shopping centres. Catering outlets in shopping malls in 10 cities recorded a closure rate of more than 30 per cent.
Meanwhile, the takeaways segment of the industry is growing rapidly with an accent on healthy eating. Statistics for last year show that overall transactions in the segment sharply increased to more than RMB150 billion in value, accounting for 4 per cent of the catering industry total.
Ajisen says its management will actively explore and seek opportunities to transform, adopting a lean management approach and establishing smart stores to enhance the customer experience.
At the end of June the group had 649 fast-casual chain restaurants, down 13 from the same time last year. However, its network extended its reach to 31 provinces and municipalities in China, amounting to 133 cities, 11 more than last year.
Four major production bases were launched – in Shanghai, Chengdu, Tianjin and Dongguan – to support the group’s expansion.
As well as China, the group has 29 restaurants in Hong Kong, down eight from last year, and one in Rome, Italy.
Questions & Answers
Q.Given that turnover dipped, how did Ajisen (China) Holdings manage to grow its core profit?
Given that turnover dipped, how did Ajisen (China) Holdings manage to grow its core profit?
The company's core profit grew due to an increase in its gross profit margin, which rose by 2.3 points to 73.1 per cent. This indicates a better control over the cost of goods sold relative to revenue.
Q.What factors are contributing to the challenging environment for the catering industry, particularly in shopping centres?
What factors are contributing to the challenging environment for the catering industry, particularly in shopping centres?
The catering industry faces intensified competition, high opening and closing rates, and a surge of new restaurants. Shopping centre catering is specifically pressured by lower footfall and insufficient customer numbers due to homogenisation of shopping centres.
Q.What is Ajisen's strategy to respond to the current market pressures?
What is Ajisen's strategy to respond to the current market pressures?
Ajisen's management plans to actively explore transformation opportunities, adopt a lean management approach, and establish smart stores. These initiatives aim to enhance the customer experience and adapt to market changes.
Q.How has Ajisen's physical restaurant presence changed in the last year?
How has Ajisen's physical restaurant presence changed in the last year?
The group had 13 fewer fast-casual restaurants in China compared to last year, bringing the total to 649. Its network, however, extended to 11 more cities. In Hong Kong, it saw a reduction of eight restaurants.
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