Cafe de Coral's earnings to triple

Hong Kong fast food chain Cafe de Coral (0341) expects its net profit for the year ending March 2024 to triple to HK$330 million.

Excluding pandemic subsidies, it is expected that the group's net profit during the same period would be about 4.7 times that of the previous year.

The share price of Cafe de Coral surged 4.8 percent to HK$8.52 yesterday after the positive profit alert.

The growth was attributed to the higher profits achieved in both Hong Kong and mainland China operations and a significant improvement in profit margins.

In Hong Kong, all businesses, including quick service restaurants, casual dining and institutional catering, have shown improvement despite slower-than-expected economic growth and a net outflow of tourists.

For the mainland, same-store sales growth is strong, with steady profit margins.

However, the family-owned chain remained conservative about expansion in the city last month, as labor costs are high and business has been hurt by northbound Hongkongers.

Despite the trend of Hong Kong residents traveling to mainland cities like Shenzhen for dining, Cafe de Coral has managed to achieve profitability through effective cost control and expanding its number of mainland stores.

Mainland China managing director James Yang Bin has previously said the company aims to increase its number of restaurants in the region from 170 to 200 this year and to 280 in the coming three years.