Restaurant firms leave plenty on the plate for investors

As earnings increase, shareholders of chain operators are rewarded with higher dividends

PUBLISHED : Wednesday, 26 June, 2013, 12:00am
UPDATED : Wednesday, 26 June, 2013, 4:20am

Restaurant companies including Cafe de Coral are wooing investors with increasing dividend payouts as they benefit from better earnings.

Cafe de Coral returned to investors 95 HK cents for every dollar earned for the year to March as net profit rose 14 per cent to a record HK$545 million over the period.

Local restaurant chain Tsui Wah raised its dividend payout ratio to 50 per cent this year, up from 30 per cent last year, as net profit surged 25 per cent to HK$129 million over the period. The group offered a dividend of 0.5 HK cent.

Raised menu prices were a major contributor to the increased earnings but the companies said cost-control measures and the opening of more central food-processing centres also played their part.

Cafe de Coral offered a special dividend of 25 HK cents on top of a final dividend of 45 HK cents, together with an interim dividend of 17 HK cents. The payout ratio for the year reached 94.9 per cent, compared with 74 per cent last year.

Cafe de Coral - which owns brands such as Spaghetti House, Oliver's Super Sandwiches and its flagship fast-food chain Cafe de Coral - said the mainland made up less than a fifth of its business. A fast expansion in China squeezed the group's cash and cash equivalent to HK$772 million last year, from HK$993 million in 2011.

The group said an outbreak of avian flu and a cooling economy in the mainland posed challenges but re-branding efforts there would boost its businesses. The group, along with Tsui Wah, will open another outlet in Hangzhou this year.

Tsui Wah, with 32 restaurants in Hong Kong, the mainland and Macau, said it would spend HK$108 million to open 12 more outlets this year - of which eight will be on the mainland.

The cha chaan teng chain's chief financial officer Yeung Tung said the firm's mainland outlets attained higher growth than their local counterparts. Same-store sales for its seven mainland outlets rose between 12 and 13 per cent last year compared with about 8 per cent in Hong Kong. The group, which raised US$98 million in its initial public offering last November, said it was looking for land in Shanghai to build its second central kitchen in China.