Cafe de Coral says it will offer an interim dividend of HK$0.15 per share to mark the 40th anniversary of the fast-food chain. Reuters

Cafe de Coral, the biggest Chinese fast-food restaurant chain in Hong Kong, posted a 15 percent net profit growth to HK$200 million in the first half of this year. Its turnover soared to HK$2.34 billion, an increase of 12 percent compared with the same period in the previous year.

The company will offer an interim dividend of HK$0.15 per share to mark the 40th anniversary of the fast-food chain.

However, chairman Chan Yue-kwong yesterday said that the recession will wipe HK$10 billion off the annual revenue of catering companies in Hong Kong and over 11.6 percent of restaurants in the city will close down.

"The current annual income of restaurants in Hong Kong is about HK$70 billion but the number will drop as diners will be cautious with their expenditure," Chan said.

The number of restaurants will decrease from 4,300 to 3,800 this year, he added.

However, the sluggish economy has had relatively less impact on Cafe de Coral. Its revenue and profits both recorded double-digit growth in the six months ending Sept 30, the company said in a statement to Hong Kong stock exchange yesterday.

The same store sales advanced 8 percent, of which 4 percent are due to a rise in food prices and the rest is attributed to attendance growth.

"Luxury or high-end catering companies will suffer more from the economic downturn, but restaurants offering relatively affordable food will perform better than their high-end counterparts," said Wong Ka-wo, president of Hong Kong Federation of Restaurants and Related Trades.

Chan told reporters at a press briefing yesterday that rental, a major source of costs for all businesses in Hong Kong, climbed up to 25 percent in the past year but slid 15 percent since September.

Cafe de Coral plans to open 50 outlets in the current financial year. It has opened 37 in the first half; another 13 outlets will start operations in the coming months, the restaurant operator said.

Chan said the capital expenditure for each outlet is around HK$3 million to HK$4 million, he said, adding that the company needs to invest HK$40 million in the second half.

To facilitate the expansion, Cafe de Coral will recruit nearly 1,000 workers in the coming months.

Fairwood, Cafe de Coral's main rival in Hong Kong, said it will open about 10 new outlets by the end of March 2009.

The company expects more middle-class consumers to shift to less expensive dining options during the recession.

(HK Edition 12/10/2008 page2)