Tam Jai International Co. Limited (TJI or the Company, and together with its subsidiaries, the Group; HKG: 2217), a leading and renowned mixian-specialized fast-casual restaurant chain, announced its first annual results after its listing in Hong Kong. Revenue of the Group saw a notable year-on-year increase of 26.8% to HK$2,275.3 million for the year ended 31 March 2022 (“FY2022”), despite the 5th wave of COVID-19 outbreak in Hong Kong in the last quarter of FY2022. Excluding one-off listing expenses and government subsidies in relation to COVID-19, its adjusted profit for the year rose by 17.8% to HK$165.5 million in FY2022.
Highlights
Prominent Performance in FY2022
— Revenue increased by 26.8% to HK$2,275.3 million year-on-year, mainly attributable to the increased number of restaurants in operation and growth in comparable restaurants revenue
— Operating profit of restaurant operations increased by 38.2% to HK$476.7 million
— Operating profit margin up by 1.7 percentage points to 20.9%
— Excluding the one-off listing expenses and government subsidies in relation to COVID-19, adjusted profit for the year increased by 17.8% to HK$165.5 million
Expanding Restaurant Network
— The unique and authentic TamJai tastes were successfully brought to different regions. The responses the Group has received from Shenzhen, Guangzhou and Tokyo were instantaneous and overwhelming
— As at 31 March 2022, there were 175 restaurants in operation across Hong Kong, Mainland China, Singapore and Japan, a net increase of 28 restaurants as compared to 31 March 2021
— Eight restaurants were opened in the Mainland China and the first restaurant in Japan was met with a rapturous reception
— TJI aims to further expand its restaurant network in Hong Kong, the Greater Bay Area, Singapore and Japan, with two more restaurants planned to open in Kichijoji and Ebisu in Tokyo, Japan in the first quarter of FY2023
Revenue of TJI’s Hong Kong restaurants saw a speedy and strong recovery to the pre-COVID-19 level during the first three-quarters of FY2022 as the pandemic eased. This was due to the support of a community of loyal customers as it consistently delivers quality food with a variety of options and exceptional service. While the entire catering industry in Hong Kong was reeling from the impact of the COVID-19 outbreak in the fourth quarter of FY2022, the Group managed to stay afloat thanks to its wide brand recognition, the great success of the introduction of premium toppings, snacks and new products, and the continued support from its loyal customers.
The rise in revenue in FY2022 was mainly attributable to the increase in the number of restaurants in operation, and the steady growth in comparable restaurant revenue in Hong Kong. Meanwhile, operating profit increased by 38.2% to HK$476.7 million, with the operating profit margin improving by 1.7 percentage points to 20.9%. This was due to the decrease in staff costs as a percentage of revenue attributable to the improvement of manpower efficiency, and the decrease in depreciation of right-of-use assets, rental and related expenses as a percentage of revenue, attributable to the improvement in its restaurant performance. The Group also continued to achieve a healthy financial position and had cash and cash equivalents of HK$1,365.2 million as of 31 March 2022.
The Board recommends paying a final dividend of HK11.4 cents per share for FY2022 or approximately HK$152.4 million in total.
Business Review
Steady comparable restaurants revenue growth despite 5th wave of COVID-19 outbreak
As part of its strategies in menu design, TJI has launched more than two dozen new products in FY2022 including toppings, soup base, snacks and beverages. The introduction of premium toppings and snacks, combined with successful marketing campaigns as well as a menu price adjustment in February 2022, resulted in an across-the-board increase in the average spending per customer, and the average daily number of bowls served per seat.
During the first three-quarters of FY2022, the comparable revenue of TJI’s Hong Kong restaurants had recovered to the pre-COVID-19 level. To mitigate the impact of the 5th wave of COVID-19 outbreak in the last quarter of FY2022, the Group had quickly boosted its takeaway/food delivery capacity, by offering takeaway promotions and maintaining a strong partnership with third-party delivery platforms. It has also carefully managed its supply chain and workforce to minimize service interruptions amid the pandemic. The decrease in dine-in revenue in the last quarter of FY2022 was partially offset by the increase in the proportion of takeaway/food delivery revenue.
Striving for improvements
Despite global logistics interruptions and the upward pressure on the cost of food and beverages consumed in face of the ongoing pandemic, the Group managed to mitigate general cost inflation through supply chain management, and product substitution or upgrades. The integration of the central kitchens of TamJai Yunnan Mixian (TamJai) and TamJai SamGor Mixian (SamGor) brands also contributed to the reduction in the costs in facilities, and enhancement of inefficiency, and optimization of food production. New supply chain management systems were also set up to optimize cost control and enhance the production planning process.
In addition, a Smart Rostering was implemented to help maintain the right level of frontline staff and productivity, and thereby optimize labor costs, as business volume fluctuates in tandem with the pandemic situation. It also made swift decisions regarding restaurant operating hours, renovation projects and restaurant opening schedules by re-assessing the market needs.
Expansion of restaurant network
As of 31 March 2022, TJI operates a total of 175 restaurants, with a geographical presence expanding to Japan on 31 March 2022, in addition to the existing markets of Hong Kong, Mainland China and Singapore. The responses it has received from its first restaurant in Japan were overwhelming: hundreds of customers queued for hours outside its Shinjuku restaurant in Tokyo, eager to be among the first to enjoy a steaming noodle bowl packed with Hong Kong flavors and culture. There is clearly an international appetite for authentic Hong Kong food experience. And this has encouraged TJI to continue looking for new global avenues to bring the perfect taste abroad.
In Hong Kong, the Group operates 81 TamJai restaurants and 81 SamGor restaurants. Its expanding restaurant network is complementary to the delivery service coverage throughout the city, as it is aware of the importance of takeaway and delivery in the industry amid the ongoing pandemic.
In Mainland China, the Group has opened eight restaurants in total under TamJai brand for FY2022, including six in Shenzhen, and two in Guangzhou. In the financial year ending 31 March 2023 (“FY2023”), it plans to open more restaurants in the Greater Bay Area as strategies are being put in place to drive dine-in and takeaway turnovers.
In Singapore, one new restaurant was opened in March 2022, and some locations of new restaurants have been confirmed in the pipeline for FY2023.
TJI also opened its first restaurant in Shinjuku, Japan on 31 March 2022, and plans to open two more restaurants located in Kichijoji and Ebisu in Tokyo in the first quarter of FY2023.
Prospects
While the past year has been a bumpy ride, TJI has demonstrated resilience and agility in face of unanticipated situations. As the pandemic enters its third year, the Group is optimistic that social restrictions will be lifted gradually, and its growth momentum should resume in Hong Kong, Mainland China, and the overseas markets.
In tune with the fast-changing customer behavior in tandem with the pandemic’s development, the Group is investing in further enhancing its restaurant-level efficiency in serving dine-in, takeaway and delivery orders. It is also implementing new supply chain management systems in Hong Kong and other markets to optimize cost control and enhance the production planning process, which would help cushion itself against logistics hiccoughs and changes in COVID-related policies on movements and mobility.
For the Mainland China market, the initial revenue and customer responses of the new restaurants in Shenzhen and Guangzhou have been favorable, and the business is expected to pick up as soon as the social activities resume.
Riding on the strong rebound in the Singapore market since November 2021, the Group will resume new restaurant opening activities, and adapt its business model to capitalize on the revived consumer sentiment and increase profitability. Besides, it has been encouraged by the rapturous reception of its first restaurant in Tokyo. As market activities have started picking up again in Japan, TJI will keep expanding its network healthily to capture the market momentum with the robust support of its controlling shareholder, Toridoll Holdings Corporation.
Mr. Daren Lau, Chairman, Executive Director and Chief Executive Officer of TJI, said, “We are very pleased to have navigated through the challenges posed by the pandemic in FY2022 with great agility and resilience as we continued to grow our revenue and operating profit margin. The encouraging results have proved our competitive advantages in food and service quality, restaurant operations and supply chain management. On the back of our successful listing in Hong Kong in October 2021, we will further expand our market presence, and bring our one-of-a-kind chain restaurant dining experience and distinctive ‘TamJai Tastes’ all over the world.”
About Tam Jai International Co. Limited (HKEX: 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 2022, the Group operated a total of 175 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 number of restaurants in 2020, according to Euromonitor