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Peggy Sito

Cafe de Coral Group has set a five-year target to double the size of newly acquired Chinese fast-food chain Manchu Wok in the United States and Canada.

The locally listed company announced its Canadian venture yesterday completed the acquisition of Manchu Wok for C$32.5 million (about HK$168.41 million).

Chairman Michael Chan Yue-kwong said about C$25 million would be financed by bank borrowings and the rest would be funded by partners' equity. Cafe de Coral had injected C$4.3 million cash into the venture -  C$1.5 million of equity participation and a shareholder's loan of C$2.8 million. Manchu Wok, which has 195 outlets across the United States, Canada and Poland, made Cafe de Coral the world's largest Chinese fast-food chain.

Last month, it linked with Canadian-based chain-shop investment company Ken Fowler Enterprises to acquire Manchu Wok from US-listed waste management and transportation firm Laidlaw.

Cafe de Coral and Ken Fowler each have about 47.76 per cent in Manchu Wok Enterprises, with the rest owned by the existing Manchu Wok management.

The acquisition gives Cafe de Coral about 380 restaurants under its management across the world, according to Mr Chan.

In Hong Kong it has 188 restaurants. Manchu Wok, established in 1980, is Canada's largest Chinese fast-food chain and the second-biggest in North America, Mr Chan says. It has 74 outlets in Canada, 119 in the US and two in Poland.

The group plans to open up to 400 more outlets during the next five years.

More than 300 of these will be franchise outlets.

Manchu Wok had ebitda (earnings before interest, tax, depreciation and amortisation) of C$6.59 million. Net profit this year was about HK$20 million, Mr Chan said.

It is expected ebitda will surge to C$14.51 million in 2005.

Mr Chan said Cafe de Coral was sitting on HK$500 million cash on hand and the acquisition would have minimal impact on the financial position of the debt-free company.



Cafe de Coral expands chain