Solid Foundation Laid for Capturing Business Opportunities from Market Recovery
Tam Jai International Co. Limited (TJI or the Company, and together with its subsidiaries, the Group; HKG: 2217), a leading and renowned mixian-specialised fast-casual restaurant chain, today announced its annual results for the year ended 31 March 2023 (FY2023). Revenue of the Group achieved solid growth of 14.0% to HK$2,594.6 million, driven by the implementation of a prudent yet well-managed expansion plan that saw the opening of 40 new restaurants across Hong Kong, Mainland China, Singapore, and Japan.
Highlights
Expanded with prudence in FY2023
— Revenue achieved solid growth of 14.0% to HK$2,594.6 million with the implementation of a well-managed expansion plan
— Revenue from Mainland China and overseas markets increased notably by 165.2%
— As at 31 March 2023, the Group had 215 self-owned restaurants across Hong Kong, Mainland China, Singapore and Japan, a net increase of 40 restaurants year-on-year
On the road to market recovery
— Hong Kong market is picking up gradually as evidenced by the improvement in comparable restaurants’ revenue performance from the first half of FY2023
— Gradual improvement in the financial performance of the Mainland China market was seen in the last quarter of FY2023 since the lifting of social distancing measures and border restrictions
— Targets to open approximately 50 new restaurants across regions in FY2024, as the Group has accelerated the process of resuming the expansion plan in the Greater Bay Area (GBA) in Mainland China while looking to expand into the western market
Profit of the year was HK$141.0 million in FY2023 (FY2022: HK$203.0 million). Basic earnings per share were HK10.5 cents (FY2022: HK17.5 cents). The Board has resolved to recommend a final dividend of HK 10.5 cents per share (FY2022: HK11.4 cents).
Hong Kong Business Picking up Gradually
During the first three quarters of FY2023, TJI’s business performance in Hong Kong was inevitably impacted by the lingering effect of the 5th wave of the COVID-19 pandemic and the related social distancing measures, in addition to the adverse consumer sentiment due to the economic downturn and the increasing operating costs caused by inflation. Nonetheless, as it entered the last quarter of FY2023 with the lifting of all social distancing measures and the reopening of the border, the Group’s Hong Kong business started picking up gradually, as evidenced by the improvement in comparable restaurants’ revenue performance from the first half of FY2023.
During FY2023, the Group opened 20 new restaurants in Hong Kong across shopping malls, and commercial and residential areas, which should complement its existing network and lay a solid foundation for further recovery in FY2024.
Strategic International Expansion
In Mainland China, the Group’s business was severely impacted by the strict COVID-19 measures and lockdowns in major cities during the year. Nonetheless, financial performance in the last quarter of FY2023 gradually improved since the lifting of social distancing measures and border restrictions. Upon reflecting on the uncertainties over COVID-19, the Group carefully reviewed its pipeline and has since refined its expansion strategy by accelerating the penetrations into the tier 2 cities in the GBA, where operating costs are lower and competition is less severe.
In Singapore, despite the challenge of local labour shortage in the second half of FY2023, the average daily number of bowls served per seat for FY2023 increased by 32.1% year-on-year to 3.7 (FY2022: 2.8). With the openings of six new restaurants, revenue in Singapore reached HK$64.2 million, representing a 149.8% year-on-year increase when compared with FY2022. During FY2023, the Group cooperated with a food delivery platform in Singapore as the additional food aggregator, enabling it to expand its customer base in new areas. With the aim to strike a balance in maintaining staff cost control, reasonable capital expenditure investment and growth momentum, the Group also explored alternative models, such as the express model, to boost operational efficiency.
With regards to Japan, the Group completed the first phase of the market entry by opening two new restaurants during FY2023. During the year, the Group focused on establishing products and service quality, improving operational efficiencies and nurturing its brand culture internally, and building brand awareness and understanding of the market. It will continue its adaption to the local culture and preferences while exploring new sales channels and enhancing operational efficiency.
Digitalisation
In its ongoing pursuit of operational excellence, TJI has made significant investments in digital technology, with a focus on enhancing efficiency throughout its operations. Notably, the Group launched the first phase of its Customer Relationship Management (“CRM”) system for both TamJai Yunnan Mixian and TamJai SamGor Mixian brands in the third quarter of FY2023. Within a few short months, approximately 450,000 unique members were successfully acquired, a testament to the effectiveness of the Group’s digital transformation strategy. Moving forward, the Group will further enhance the features of its CRM and mobile apps to improve operational excellence and the overall customer experience.
Robust Supply Chain Management
In response to the global price hike on food costs, TJI has expanded its supplier network and increased the proportion of direct and localised food supply, which can effectively lower the transportation cost and lead time as well as minimise the risk of logistic disruption. It has also partnered with selected original equipment manufacturer suppliers in the regions it operated for bulk purchases, to strengthen its cost and supply chain control. Besides, the development of new products and combo menus was in full swing, leading to up-selling opportunities to mitigate increasing costs. The Group is also looking to improve its Supply Chain Management (SCM) system flow further and invest in automation technologies, in order to enhance its operational efficiency and strengthen its grip on the supply chain to support its future expansion.
Sustainable Development
The challenges the Group faces have not distracted it from its focus and commitment to delivering its environmental, social and governance (ESG) commitments. The Group has set up the “Tam Jai Goodness Trust” to support various initiatives under its three ESG pillars: “Nourishing Communities”, “Uplifting People”, and “Preserving Nature”. The TJI Education Support Scheme, “Go Green” menu, “TamJai Che Che” and the charitable NFT project earned recognition from both the public and its staff. In addition, the Group held a Sustainability Week to enrich the ESG knowledge of its employees and encourage them to embed sustainability into daily business.
Prospects
As a key revenue and profit driver, TJI’s business in Hong Kong is expected to continue the recovery brought forward from the last quarter of FY2023 when all border restrictions and social distancing measures were lifted. Committed to sustaining its prominent brand value in the city, the Group will continue to devote great amounts of resources to enhance its product and service qualities and deliver exceptional dining experiences through its digitalisation journey and innovative product development.
With regards to the Mainland China market, the Group is confident that the revenue performance will improve after the border re-opening and the relaxation of COVID-19 restrictions, as demonstrated by the notable improvement in the last quarter of FY2023. It has accelerated the process to resume its expansion plan in the GBA region and will implement various marketing campaigns to capture the opportunities from the stabilising economy in FY2024.
The Group also looks to advance its business operations in Singapore and Japan, enhancing operational efficiency and service quality while adapting its brand to the local markets.
On top of its existing presence, TJI will look to expand into other potential markets, such as the western market, to broaden its business footprint further and derive greater synergies and efficiency. It will explore the possibility of strategic collaborations with local partners to help tap into those markets, by leveraging their local experience and resources. It is targeting to open approximately 50 new restaurants across regions in FY2024.
Mr. Daren Lau, Chairman, Executive Director and Chief Executive Officer of TJI, said, “Over the past few years, we have shown a high sense of agility in our operations to cope with the uncertainties, and demonstrated our commitment to investing into brand building and systems enhancement to optimise our business processes. Now as we see light at the end of the tunnel, with the solid foundation we have established, we are more than prepared for the business opportunities on the road to market recovery.”
About Tam Jai International Co. Limited (HKG: 2217)
TJI has been listed on The Stock Exchange of Hong Kong Limited (HKG: 2217) since October 2021. It is one of the largest and most popular fast-casual restaurant chains and the No.1 Asian noodle specialty restaurant operator in Hong Kong.* It primarily operates the TamJai Yunnan Mixian and TamJai SamGor Mixian brands, with operations in Hong Kong, Mainland China, Singapore and Japan. As of 31 March 2023, the Group operated a total of 215 restaurants. With the first TamJai Yunnan Mixian restaurant and the first TamJai SamGor Mixian restaurant opened in 1996 and 2008 in Hong Kong respectively, it has pioneered and popularised the new mixian trend in Hong Kong.
*In terms of both revenue and the number of restaurants in 2020, according to Euromonitor
