Increased competition whittles fat from Ajisen (China)

Competition in the catering industry has intensified with high opening and closure rates, Ajisen (China) Holdings notes in releasing its results for last year.

As well as running restaurants, the group manufactures noodles and related products.

For the first time in recent years, Ajisen ended the fiscal year with fewer restaurants. It says the market in China was over-supplied by restaurants with catering stores reaching 5.81 million last year, a decrease of about 3.4 per cent (210,000 outlets) on the previous year.

After record growth, the takeaway delivery service has stabilised, bringing “immense change” for the catering industry, says Ajisen.

Service quality has improved in restaurants thanks to consumers being able write reviews, and the catering market is shifting to become consumer-oriented.

Ajisen says it will establish smart stores to enhance customer experience. Meanwhile, management is actively targeting investment by capitalising on opportunities arising from industry reform.

At the end of the year, the group had five major production bases throughout China and was deepening its network density in mature markets.

During the year, the restaurant business generated about RMB2.2 billion, accounting for about 94.8 per cent of total revenue. Turnover decreased by 2 per cent to about RMB2.3 billion, mainly attributed to VAT reform in China.

Profit attributable to the owners of the company fell by 173.1 per cent, a loss of about RMB487 million compared to a profit of about RMB665 million the previous year.

As the end of December, the group’s restaurant portfolio comprised 704 Ajisen chain restaurants, the number in Hong Kong dropping by six to 29.

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