Tam Jai International Co. Limited (TJI or the Company; TJI together with its subsidiaries as the Group; HKG: 2217), a leading and renowned mixian-specialized fast-casual restaurant chain in Hong Kong, Mainland China and Singapore, announced its first interim results after listing. The Group has achieved remarkable results, with revenue soared by 43.0% year-to-year to HK$1,181.5 million. Taking out non-recurring listing expenses and government subsidies in relation to COVID-19, its adjusted profit surged by 107.8% to HK$147.0 million. This demonstrates the real strengths of TJI.
Highlights
Promising results in 1H2022
— Revenue increased by 43.0% to HK$1,181.5 million, mainly attributable to the increased number of restaurants in operation and substantial growth in comparable restaurants revenue, which has already recovered to pre-COVID-19 level.
— Operating profit of restaurant operations increased by 96.7% to HK$303.3 million, with the operating profit margin up by 7.0 percentage points to 25.7%
— Excluding the non-recurring listing expenses and government subsidies in relation to COVID-19, adjusted profit increased by 107.8% to HK$147.0 million, with adjusted profit margin up by 3.8 percentage points to 12.4%
— The profit margin improvement was attributable to the increase in revenue, reduction of cost of food and beverages consumed and staff costs as a percentage of revenue.
Growing footprint
— As at 30 September 2021, there were 157 restaurants in operation across Hong Kong, Mainland China and Singapore, a net increase of 26 restaurants as compared to 30 September 2020.
— The development outside of Hong Kong is aligned with management’s expectations with new restaurants in Mainland China mirrored the growth trajectory of the operations in Hong Kong
— In 2H2022, TJI aims to open 14 new restaurants in Hong Kong, a few more restaurants in Greater Bay Area, Singapore and enter the Japan market.
For the six months ended 30 September 2021 (“1H2022”), the Group sees a gradual recovery in consumer spending as restaurant operators continue to adjust to new market norms, such as cost control and supply chain challenges as restaurants strive to balance food quality and price and the surging demand for takeaway and online delivery orders. These factors have made the Group’s business more resilient as it navigates industry challenges and achieves an outstanding business performance.
During 1H2022, the Group’s revenue increased by 43.0% year-on-year to HK$1,181.5 million, mainly attributable to the increase in the number of restaurants in operation and substantial growth in comparable restaurants revenue. Correspondingly, operating profit of its restaurant operations climbed by 96.7% to HK$303.3 million, with the operating profit margin has improved by 7.0 percentage points to reach 25.7% thanks to the increase in revenue, reduction of cost of food and beverages consumed and staff costs as a percentage of revenue. Excluding the non-recurring listing expenses and government subsidies in relation to COVID-19, adjusted profit for the period increased remarkably by 107.8% to HK$147.0 million, with an adjusted profit margin up by 3.8 percentage points to 12.4%.
Business Review
Comparable restaurants revenue back to pre-COVID-19 level
The comparable restaurant revenue of TJI’s Hong Kong restaurants in 1H2022 has already substantially recovered to pre-COVID-19 level, despite the ongoing social distancing measures and restrictions on both seating and dining hours. The key to such an outstanding performance is the strong recognition of its brand. As it endeavors to expand the variety of its menu offerings, the Group has introduced new products and premium toppings, as well as the suggestive selling of snacks and drinks in special takeaway combo offers, which have been warmly received by its customers.
Additionally, the Group’s successful branding and promotional campaigns, including creating social media content and connections, and various series of collaboration and promotions have also enhanced its brand awareness and visitations significantly. This is especially important in the time of the pandemic, which limits the physical travel distance of residents.
Increase in operating profit margin: optimization and agility
Despite the ongoing challenges posed by COVID-19, TJI has been able to widen its profit margin by placing agility and optimization at the heart of its business strategies. This has enabled TJI to bring costs under control. For example, the integration of the central kitchens of both the TamJai Yunnan Mixian (“TamJai”) and TamJai SamGor Mixian (“SamGor”) brands brought about savings on the operating cost and strengthened its ongoing partnership with its suppliers. The great variety of toppings and snacks also afford it the agility in supply chain management, both in terms of inventory and cost control. The Group has also been able to introduce premium toppings, promotions on delivery platforms, which not only add to the increase in average spending per customer but also improve the profit margin of its restaurant operations.
The Group has demonstrated agility in the “Smart Rostering” (flexible work hour management) of its staff, too. When COVID-19-related regulations came and went with short notice, it was able to shift its frontline staff around the different workstations, from the kitchen, takeaway and delivery order processing to the cashier desk, serving and more. Thanks to the efficient streamlining of restaurant operations and its ongoing investment in employee training, the Group’s frontline staff adapted quickly. This minimised disruption to the people in its restaurants, to whom it owes its success, and optimised the use of its existing manpower as it navigated a series of new challenges.
Expansion of restaurant network
As at 30 September 2021, TJI’s total number of restaurants expanded to 157, a total net increase of 26 restaurants from 131 as at 30 September 2020. Its extensive restaurant network includes 150 in Hong Kong, 4 in Shenzhen and 3 in Singapore in 1H2022.
The restaurant network expansion in Hong Kong has been one of the main contributing factors to the Group’s increase in revenue, as it goes hand-in-hand with the increase in average spending per customer and average daily number of bowls served per seat. Its expanding restaurant network is complementary to the delivery service coverage throughout the city, as it is well aware of the importance of takeaway and delivery orders amid the ongoing pandemic.
The development outside of Hong Kong is aligned with management’s expectations. Its new restaurants in Shenzhen mirrored the growth trajectory of the operations in Hong Kong. All of them have met management’s expectations in terms of revenue and operating profit margin at restaurant level. The Group will further invest in its management team and infrastructure in Greater Bay Area, including a training centre for frontline staff, to fuel its high-speed growth in the market.
Prospects
TamJai and SamGor are known for their great variety of food choices and the versatility of their recipes, and TJI will continue to leverage these strengths to attract and retain customers. The Group will launch new and premium toppings to tantalise the taste buds of its patrons. It will also implement new supply chain management systems to optimise cost control and to keep its inventory well-stocked. Aware of the changes in customer behaviour in light of the pandemic, the Group is also investing in additional operating equipment and new technologies such as supply chain management, a customer relationship management system and a voice ordering system to further enhance restaurant-level efficiency in serving dine-in, takeaway, and delivery orders.
Noting that brand loyalty is one of the key factors for success, the Group is looking into increasing its investment in branding campaigns, especially in markets outside Hong Kong, investing in strengthening its relationship with stakeholders through the launch of various corporate social responsibility programmes, and demonstrating its commitment to its employees’ happiness by investing in their wellbeing, training and development.
In terms of growing its restaurant network, it aims to open 14 new restaurants in Hong Kong by end of March 2022, during which the Group also plans to open a few more restaurants in the Greater Bay Area and Singapore. In Japan, with the strong support of Toridoll Holdings Corporation (the Company’s controlling shareholder incorporated in Japan and listed on the Tokyo Stock Exchange), the Group looks forward to opening two new restaurants in the first quarter of 2022, and anticipates their success.
Mr. Daren Lau, Chairman, Executive Director and Chief Executive Officer of TJI, said, “Subsequent to the successful listing in October 2021, we are very pleased to have reached yet another milestone in our development by achieving record-high revenue and widening our operating profit margin despite the ongoing pandemic situation. This outstanding performance was the result of placing agility and optimization at the heart of our business strategies, and acts as a strong testament to our one-of-a-kind status in Hong Kong’s food and catering scene. Building on the successful listing and our solid foundation, we will go further in bringing our distinctive Tam Jai Taste to the world while creating greater value for our shareholders.”
About Tam Jai International Co. Limited (HKG: 2217)
Tam Jai International is the No.1 Asian noodle specialty restaurant operator in Hong Kong*. It is a leading and renowned restaurant chain operator of the TamJai Yunnan Mixian and TamJai SamGor Mixian branded fast-casual restaurant chains in Hong Kong, with operations also in Mainland China and Singapore. As at 30 September 2021, the Group operated a total of 157 restaurants, comprising 150 restaurants covering all 18 districts across Hong Kong Island, Kowloon and New Territories, four TamJai restaurants in Shenzhen, Mainland China and three SamGor restaurants in Singapore. TJI’s controlling shareholder, Toridoll Holdings Corporation, is incorporated in Japan and listed on Tokyo Stock Exchange.
* In terms of both revenue and number of restaurants in 2020, according to Euromonitor