Read - ENG - Fat profit for fast food firm

Fat profit for fast food firm - 09/07/2009

Hongkongers may pay less for fast food as Cafe de Coral (0341) has room to reduce prices amid declining food costs after posting an all-time-high net income in the past financial year.
The chain said it may ease prices on items by 50 HK cents to HK$1, which accounts for 1.7 percent to 3.3 percent of the average spending of HK$30 per customer, as material costs like pork prices are down 30 percent this year.

While direct price cuts are not being considered, it intends to launch cheaper dishes, provide more meal combos and improve subsidiary services.

"We have indirect price reductions, such as an extra dish in the hotpot for HK$1," chairman Michael Chan Yue- kwong said yesterday.

Competitor Fairwood Holdings (0052) releases its annual results today.

Net profit of CDC climbed 5 percent to record HK$442 million amid market adversity as consumers opted for cheaper meals, Chan said.

Its revenue also saw a 9 percent growth to reach HK$4.67 billion. Proposing a final dividend of 38 HK cents, the group would pay a total dividend of 68 HK cents, representing a 36 percent growth and a payout ratio of 85 percent.

The company plans to invest HK$100 million to open 60 new restaurants this year - 30 in Hong Kong, 20 in China and 10 in the United States.

"Our food-processing plant in Guangzhou will be in operation by the end of this year. It will be bringing an extra income equivalent to 1 percent of our revenue, which is a very large contribution," Chan said.

The firm also intends to employ extra workers for a new food-processing plant in the SAR which will operate by 2011.

"A total of 14,000 people worked for us last year, which is an increase of 1,000 in just one year,"Chan said.

Although the company froze wages this year, Chan said it is willing to shoulder some social responsibility under the impending minimum wage law.
http://finance.thestandard.com.hk/en/business_news_view.asp?aid=84552