Cafe de Coral sales rise, but staff, promotions dent profits

Cafe de Coral sales rose 6.7 per cent last year, but increased spending on staff and consumer demand for special offers dented profits.

The group’s sales rose to HK$8.427 billion, but profit attributable to shareholders, of $458 million was down 9.1 per cent, mainly due to increased manpower investment.

About three-quarters of the Cafe de Coral’s income comes from quick-service restaurants (QSRs) and institutional catering (such as supplying school lunches). Those businesses delivered stable growth as the company focused on “improving the customer journey”.

“We invested in people and upgraded in-store technologies to increase efficiency and add value for customers,” the company said in its results announcement.

Cafe de Coral ended its 50th anniversary year with 298 outlets in Hong Kong – a net increase of three – with its Hong Kong home-market sales up 5.6 per cent.   

“Overall, Hong Kong’s market for fast food remains positive, although consumers have become more price sensitive and are increasingly attracted by lower prices and value promotions,” the company said. “On the other hand, rents have remained high despite the relatively soft economy – which continued to exert pressure on margins.”

Sales in its flagship Cafe de Coral chain rose 3 per cent.  

“The new 6th generation interior design was rolled out to 11 shops during the year, and has been warmly received by customers. Upgrading the customer journey through the application of technology, Cafe de Coral fast food also advanced its point-of-sale system, launched new smart-ordering kiosks, and introduced a kitchen-video system to improve overall efficiency and reduce customer waiting time.”

After the financial year ended, Cafe de Coral revamped its customer-loyalty program in April by offering more benefits and enhancing its online-membership platform. It opened 12 new outlets last year and closed 11.

Sales at  Super Super Congee & Noodles were stagnant, up just 1 per cent, while The Spaghetti House performed “solidly” after the store network was trimmed.

“Re-engineering the menu and improving the quality of ingredients, together with the launch of a more compelling VIP program, fuelled the brand’s same store sales growth,” the company said.

Its Oliver’s Super Sandwiches chain reinforced its branding through seasonal product campaigns and enhanced of ingredients. At year’s end, The Spaghetti House operated nine outlets (down three) and Oliver’s Super Sandwiches 15, (down four).

The group said its home-grown casual-dining brands, Shanghai Lao Lao and Mixian Sense, achieved “promising growth with increasing brand awareness and reputation”. Shanghai Lao Lao added four stores to reach 14, while Mixian Sense – which caters to customers seeking healthy and tasty food – grew from six stores to 15 as consumers embraced the ‘healthy and delicious food” offer.

Mainland China sales rose 10 per cent, with the fast-food division driving growth. The company operated 97 outlets on the mainland – seven more than a year earlier.

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