Staff costs hit profit at Cafe de CoralBusiness | Samantha Wong 27 Jun 2017
Cafe de Coral Group (0341) recorded a 2.7 percent decrease in net profit to HK$503 million year-on-year, while reporting a 4 percent increase in revenue to HK$7.895 billion, due to an expansion of its store network and portfolio enhancement.
A final dividend of 63 HK cents per share is proposed, with a total dividend payout ratio 94.1 percent for the year.
The restaurant and institutional catering company said Hong Kong segment results dropped 6.2 percent mainly due to the increase in manpower costs.
Mike Lim Hung-chun, chief financial officer of the group, said the cost of labor accounted for 31 percent of sales, and a double-digit percentage pay rise for employees led to the increase in manpower expense. Nevertheless, the company said it recognized that offering competitive pay and benefits, and encouraging work-life balance, is crucial to maintain sustainable growth of the business.
During the year, Cafe de Coral opened 10 new fast-food outlets, bringing the number of stores to 166. Twelve new stores will be opened in the coming months.
We see the softening leasing market as an opportune time to expand our network more aggressively, despite keen competition for good locations, the company said.
Chief executive Peter Lo Tak-shing said the company expects to hire 1,000 more staff for the expansion of network, with 30 to 40 more branches in Hong Kong, and 10 to 20 branches in the mainland.
The company also said mainland results increased 147.5 percent, mainly due to strong same-store sales growth and improvement in profit margin.
New business models have been developed in the mainland, including e-commerce and online-to-offline deliveries, in response to changes in consumption behavior and higher service expectations among customers, the company added.
The group has 359 operating units in Hong Kong and 99 outlets in mainland China, with a workforce of about 18,800 employees for the financial year.