Cafe de Coral cautious about increasing prices

Cici Cao

Hong Kong's Cafe de Coral (0341) said it will follow a conservative pricing tactic next year as there is not much room for price hikes amid a weak market.

This came as the fast food chain revealed its interim net profit fell nearly 30 percent year-on-year.

Chief executive Piony Leung Ho-ting said there will be more promotions to "offer a value-for-money menu mix" to attract customers.

Leung expects second-half same-store sales to remain at current levels or improve slightly as October saw an influx of business while November is traditionally the off season.

The group plans to open six new quick-service restaurants as well as 10 new stores in the mainland.

Net profit for the six months ended September fell 28 percent to HK$140 million, year-on-year due to the sluggish local retail sector and competitive mainland market. However, it maintained an interim dividend of 15 HK cents.

During the period, revenue totaled HK$4.26 billion, a year-on-year decrease of 1.25 percent.

Hong Kong revenue decreased by 1.19 percent to HK$3.5 billion, while mainland businesses contributed HK$763 million, down 1.51 percent.

In Hong Kong, the quick service restaurants division's revenue edged up 0.3 percent to HK$2.57 billion, 60.4 percent of the group's total.

Cafe de Coral's average unit price is nearly HK$43, an increase of about 2 percent year-on-year, mainly due to the addition of curry ingredients, said Leung.

In the mainland,business improved thanks to promotions, following a previous quarter impacted by downward economic pressure and price cuts in the market.

The mainland's catering market is locked in a price war, with fish chain Tai Er cutting its average dish price to 69 yuan (HK$74). Tai Er, under Jiumaojiu International (9922), operates 654 mainland outlets and five in Hong Kong.

Hotpot giant Haidilao International (6862) has also a 50-yuan meal set, which is nearly half the price of its 2023 average sale of 99.1 yuan per person.

Cafe de Coral had 381 shops in Hong Kong and 176 in the mainland as of September, compared with 380 and 176 respectively as of March.

Its shares closed 1.5 percent higher at HK$7.88 apiece yesterday.