Why are Hong Kong fast-food giants Cafe de Coral, Fairwood suffering in downturn?
The two companies were considered resilient players during previous downturns caused by global financial meltdowns in 1997 and 2008 and two health crises – the 2003 outbreak of severe acute respiratory syndrome (Sars) and the Covid-19 pandemic in 2020.
But Cafe de Coral, founded in 1968, and Fairwood, established in 1972, are arguably facing their biggest challenge in more than half a century.
'Fairwood and Cafe de Coral are 'inferior goods', which means they perform better when the economy is bad, and even outperformed some mid- to high-tier restaurants during previous recessions,' said Billy Mak Sui-choi, an associate professor at Baptist University's department of accountancy, economics and finance.
'Now, the competitive market, the ageing population, shifts in consumer habits, and these chains not going onto delivery platforms all contribute to their decreasing profits.'
In the last financial year, Cafe de Coral Holdings' net profit dropped by 29.6 per cent from 2023-24 to HK$233 million. Fairwood Holdings' net profit fell by 28.8 per cent to HK$36 million.
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