Cafe de Coral group expects its full-year profit to plunge by up to 90 percent for the March year as the Covid-19 crisis and last year’s protests dented customer traffic.
In a profit warning to shareholders, chairman Sunny Lo said that during the fourth quarter, the group entered into the deficit when the outbreak of Covid-19 occurred.
“Business operations and consumer spending in the group’s key operating territories have been severely impacted by the outbreak of Covid-19 since January,” he said in a stock-exchange filing. “The group’s business performance, which had already been impacted by poor market conditions and weak consumer sentiment during the first half of the year, was even more significantly impacted during the fourth quarter when our business and operations were further affected by Covid-19.”
Besides its namesake brand, Cafe de Coral Holdings operates chains including The Spaghetti House, Oliver’s Super Sandwiches, Super Super Congee & Noodles, Shanghai Lao Lao and Mixian Sense.
During the six months to September 30, Cafe de Coral group recorded a decline in profit of 34.5 percent. Full-year results are expected to be released in mid-June.
Lo said the group has been closely monitoring market conditions and has adjusted its business strategies and operations to minimize losses. In an attempt to increase sales, the Cafe de Coral group has introduced simplified menus featuring low price meals and extensive promotions.
“Adapting to social-distancing trends, marketing focus on takeaway and home delivery have increased,” said Lo.
“The group has also implemented proactive cost control measures on rent, labor and food – and is stringently managing working capital to ensure healthy cash flow and a strong cash position to weather the currently difficult operating environment.”