Hong Kong’s largest fast food chain Cafe de Coral serves up 16pc increase in first-half profit

Cafe de Coral, Hong Kong’s largest fast food chain, beat analysts’ expectations as it posted a 16 per cent jump in first-half profit driven by lower raw material costs and steady wages.

Net profit rose to HK$239.1 million (US$31 million) for the six months ended September 30 from HK$205.7 million in the same period last year, while revenue rose 1.7 per cent to HK$4.2 billion, according to the company’s statement.

Walter Woo, an analyst at CMB International Securities, had forecast a 7.2 per cent rise in profit, while Barney Wu at Guotai Junan Securities said it was “above his expectations”.

Peter Lok Tak-sing, chief executive of Cafe de Coral, said that the gross profit margin had improved to 12.3 per cent from 11.9 per cent as the “prices of raw materials have been stable this year”.

The company’s profits took a hit last year as it had increased average hourly wages by a quarter after receiving complaints of overworking its staff.

“This time around they were hardly under pressure to increase wages again this year,” said Woo of CMB International Securities.

But another increase to the minimum wages set to take effect in May could pose a challenge to the company. The extent of the raise is still being debated by Hong Kong’s lawmakers.