Expanding restaurant chain stays faithful to core values

PUBLISHED : Friday, 05 December, 2008, 12:00am
UPDATED : Friday, 05 December, 2008, 12:00am

Restaurant chain Cafe de Coral Holdings, the winner of the Enterprise Award this year, caters to an average of 300,000 customers daily in Hong Kong.

From its humble beginnings as a single-outlet fast food restaurant in the late 1960s, to being the first publicly listed Chinese quick-service restaurant chain in the 1980s, to its global presence with more than 590 outlets worldwide, Cafe de Coral, which celebrates its 40th anniversary this year, is a testament to the success of Hong Kong itself.

The group has since expanded beyond fast food to encompass specialist restaurants, institutional catering, and food manufacturing and distribution. It employs more than 13,800 staff worldwide and its turnover last year reached HK$4.29 billion.

Despite its massive expansion, Cafe de Coral has continued to espouse the core values laid down four decades ago and easily identified through its catchy Chinese name.

'We want to make all the stakeholders - our staff, shareholders and customers - happy,' said chairman Michael Chan Yue-kwong. 'Cafe de Coral is a market-driven company. We adapt to meet the changing tastes of our customers.'

For instance, the group diversified from only serving sandwiches in the 1970s to steaks served on sizzling metal platters in the 1980s, to Chinese cuisine and hot-pot meals in the 1990s. Breaking the mode of a fast food restaurant, Cafe de Coral has recently introduced freshly stir-fried Chinese dishes.

Although the group's pricing strategy is geared to under HK$100 per person, it has invested substantial capital to enhance the dining experience by modernising the decor of its branches and upgrading the service offered by frontline staff. 'We have set the trends for the local industry,' Mr Chan said.

The chain pursues its brand differentiation through product innovation. With growing public awareness of a balanced diet with enhanced nutritional value, it has introduced steamed rice mixed with chopped green vegetables and oatmeal, and increased the proportion of vegetables in its hot-pot meals, which traditionally had a high meat content.

To address increasing public concern about food safety, the group purchases more than 80 per cent of its ingredients from sources outside the mainland. 'We provide quality assurance by implementing a global sourcing strategy,' he said.

The corporate culture of Cafe de Coral fuses the best management philosophies of east and west. While the group relies on consensus and fosters a strong sense of staff ownership, it also embraces such western concepts as management by objectives and staff incentives, such as performance bonuses and share options.

Mr Chan said the chain was 'a labour-intensive operation that requires well-developed systems. At the same time, effective management of human resources necessitates that our staff identify with our corporate core values'.

Cafe de Coral has invested more than HK$300 million to establish two state-of-the-art food-processing plants in Tai Po and Guangzhou in an initiative to enhance production efficiency and product quality. The plants are scheduled to begin operations in 2010 and 2009 respectively.

Regardless of the economic ups and downs, Cafe de Coral is committed to Hong Kong. It seeks to turn challenges into opportunities. 'For instance, we accelerated the computerisation of the operation of our branches during the last economic downturn in 1998,' Mr Chan said. In the economic climate, perhaps some shopping malls would become more willing to lower their rents so that the chain would be able to open branches in previously unaffordable locations, he added.

Cafe de Coral is encouraged by the recognition that comes with the DHL/SCMP Business Awards. 'It is also in sync with the current economic climate,' he said. 'We have built a solid business on very tangible products catering to the mass market. Over the past 40 years, we have been through many tough challenges with the Hong Kong people. We are committed to being part of their daily life.'