Cafe de Coral earnings jump 10pc but price rises not on the menu
Cafe de Coral Holdings said it did not plan to increase prices to combat a likely rise in costs after it posted a 10 per cent jump in net profit to HK$221.37 million for the six months to September.
The catering group reported record revenue of HK$2.39 billion during the period, up 1.9 per cent from HK$2.34 billion a year earlier.
Chairman Michael Chan Yue-kwong said yesterday that the company had experienced a hard time in the first half given the threat of swine flu.
However, lower raw ingredient prices, especially for pork and chicken, had helped to boost profit.
'In the second half of this year, we are facing bigger inflation pressure, as the labour cost, commodity prices and rents might be going up,' said Chan.
According to the company's interim results, the cost of sales rose 1 per cent to HK$2.01 billion from HK$1.99 billion.
Chan said there was little room for the fast-food chain to raise menu prices across its 182 local outlets, as it had already done so a year ago to absorb higher food costs at the time.
However, he was optimistic for the market next year, when a better economy was expected to encourage local and overseas consumers to spend more.
At present, average spending stands at about HK$29 per person at the chain's outlets.
'I think this figure will exceed HK$30 next year as people are willing to order more food or drinks in our restaurants. It may not be a lot for an ordinary restaurant but is quite a breakthrough for a fast-food business,' he said.
In addition to its Hong Kong stores, the catering group has 169 outlets in North America and 69 on the mainland as well as in other regions. It also operates 71 institutional catering units and 37 specialty restaurants in the city.
As part of an ambitious expansion plan, Cafe de Coral plans to open about 30 new fast-food restaurants next year, including 10 to 15 in Hong Kong and 15 to 20 in the south of the mainland, where it has 62 outlets at present.
Chan said mainland consumers' average spending was increasing quickly, rising from HK$20 per person in 2007 to HK$22 this year. The company plans to open a total of 200 outlets in the region by 2013 to 2014.
At the end of September, the company held net cash of about HK$882 million, which might be used to buy properties in Hong Kong and acquire fast-food businesses on the mainland, Chan said.
The group announced an interim dividend of 17 HK cents per share.
Shares in the company dropped 24 HK cents or 1.4 per cent to HK$17.56 yesterday.