Chairman's Message

The past year has been an eventful and productive one for all of us at Café de Coral. In addition to achieving satisfactory performance in most of our businesses, we completed our succession plan and laid the groundwork for a new generation of talent.

It is gratifying to see our new management team, which is led by our Chief Executive Officer Mr Lo Tak Shing, Peter, taking over the reins. The new team has not only aligned our Company with the five-year business plan and founders’ philosophy but is also exploring new opportunities and addressing the challenges for our business. The team has been driving and investing in various new initiatives when we have to step outside of our comfort zone. Yet, I have great confidence in our team’s ability to capture new opportunities with the right strategy and at the right pace, and to take the Company forward.

EMBRACING NEW CHALLENGES

Our three business pillars comprise our Hong Kong quick service restaurants (QSR), Mainland operations and Hong Kong casual dining.

It is encouraging to see the satisfactory performance of our QSR business and our team’s ability to maintain our market leadership. We have succeeded in overcoming difficulties in Hong Kong’s increasingly competitive food and beverage (F&B) sector by capitalising on our reputation for offering delicious, safe and healthy dishes at affordable prices. To build on this reservoir of goodwill, we have been enhancing the customer experience, in particular through our Customer Journey programme during the year.

The labour shortage and long working hours in our industry have always been key challenges for our QSR team. The multi-faceted recruitment, development and retention strategy we implemented during the year has helped us tackle these issues more effectively. We have also made a great effort to enhance our employee compensation and recognition schemes, which have made Café de Coral a much more rewarding place to work. I should note here that the investments we made in further strengthening our workforce during the year have had a short-term impact on the Company’s performance but, overall, these are necessary for the long-term growth of our business.

In the China market, our team’s ongoing efforts to develop our brand have begun to yield results. The F&B industry in Mainland China is highly competitive, and customer consumption patterns are changing rapidly. To meet the unique challenges of this market, we have developed a strategic plan under which we have successfully consolidated our business and built a strong local team. Our team has been working extremely hard to adapt our menus to local customer tastes and to launch marketing campaigns suitable for this market. As a result, we achieved positive same store sales growth during the year, giving us a very solid foundation on which to build momentum for our future growth.

During the past few years, the Group has been expanding our portfolio in the casual dining sector by creating new business models and concepts as well as refining long-established ones. The team has also responded to difficult market conditions and severe competition by continuously fine-tuning our brand portfolio through the consolidation of old brands and the introduction of new brands to increase market share. It is especially encouraging to see how much we have accomplished with Shanghai Lao Lao and Mixian Sense, our home-grown brands, and this gives me great hope in the team’s ability to build up our business in this sector.

COMMITTED TO SUSTAINABILITY

Since the beginning, we have focused on the needs of the mass public. We understand our customers well, and because of this we have been able to maintain stable growth. We also believe in treating our employees fairly and with respect, as this not only increases staff morale but motivates them to provide better customer service in line with our vision of operating as a sustainable company.

As Chairman of Café de Coral, I am wholly committed to sustainability as a way of thinking, and I am especially proud that we were included in the Hang Seng Corporate Sustainability Benchmark Index yet again this year. In FY2016/17, we continued to build and strengthen our sustainability platform across all of our operations, which is described in detail in our Sustainability Report — the fourth since we began publishing standalone reports. In addition to outlining our sustainability performance during the year, the report demonstrates how we have implemented our strong commitment to sustainability that guides the Company.

ACKNOWLEDGEMENTS

I would like to take this opportunity to pay tribute to my late father and one of the founders of Café de Coral, Victor Lo Tang-seong, who passed away on 30 June 2016 at the age of 101. He was an inspiration to me and the Company and set in place the values we continue to live by today. He will be missed by all who knew and worked with him.

Finally, I would like to extend my appreciation to the Board whose support I have greatly appreciated. In addition, I thank all of our staff for their hard work, dedication and contributions to our success, as well as our shareholders who continue to put their faith in us. With our new management team in place, and the values that we continue to adhere to at Café de Coral, I am highly optimistic that they will take our Company to even greater heights.

Lo Hoi Kwong, Sunny
Chairman

Hong Kong, 26 June 2017

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