If you don't die in silence, you break out in silence.

Since June, there has been a long silence$everyone Lok Group (00341.HK) $It directly recovered the land lost during the year with a continuous rise, with a cumulative increase of 23.05% and a 52-week high of 23.7 Hong Kong dollars. Brother Corp.$00052.HK (Happy) $There was also a sharp rise, with a cumulative increase of 7.33%, a 52-week high of 29.88 Hong Kong dollars. However, the time-honored brands in Hong Kong's catering industry are still in a declining channel, approaching an all-time low of HK $0.64. Interestingly, behind this are the different development paths of the three Hong Kong catering companies.

According to Zhitong Financial APP, everyone's Lok, Tai Happy and Cuihua restaurants, as time-honored brands in the catering industry in Hong Kong, have always been loved by the general public. As brother companies, everyone and Da Happy operate similar dishes and services, but after standing firm in the Hong Kong market, we are happy to further expand their business to Shenzhen and Guangzhou with the same taste, starting a new round of growth, while Da Happy stays in Hong Kong. continue the slow store opening plan, slow growth. As for Cuihua Restaurant, although, like everyone else, it also set its sights on mainland China, it offered to increase its fees and charges without increasing its volume, resulting in not only being abandoned by the market, but also being overwhelmed by high operating costs.

Everyone is happy to go north again to make money.

When it was founded in Hong Kong in 1968, it was just an ordinary tea restaurant, and neither founder Lo Teng-hsiang nor uncle and nephew Luo Kaimu thought it would become a fast-food chain everywhere in Hong Kong. and became the first fast-food group listed in Hong Kong in 1987.

Anyone who has eaten it knows that compared with ordinary western fast food and Chinese snacks, the menu we enjoy brings together the essence of local cuisine, of which 60% are Chinese food and 40% are exotic. The diversified diet has also given us a firm foothold in Hong Kong.

In 1992, Guele began to turn its attention to the big mainland market and quickly set up camp, opening about 20 stores in Guangdong, Shanghai and Beijing in one breath. However, as the mainland market was not yet mature at that time, everyone had no choice but to hit a brick wall and take Hong Kong as the main battlefield.

In 2000, Chen Yuguang, who had received formal Western-style education and studied urban planning, took over the position of chairman of Jiele Group and practiced his idea of "system management" with modern enterprise management system: the branch of Jiele adopted the management mode of "more work, more pay, self-financing and loss", so that the enterprise could grow. In 2003, you Le again "Northern Expedition", determine a new positioning, and lock in the South China market.

According to Zhitong Financial APP observation, in the 28 years from listing to 2015, the share price of Jiele can bring a lot of income to investors in most years. However, between 2019, due to a slowdown in revenue growth and a decline in net profit, the stock price has been silent for nearly three years.

Now, everyone's share price has rebounded again and has handed over its report card with rising revenue and net profit, suggesting that the period of decline is over and there is a strong tendency to go head-on. According to Zhitong Financial APP, for the year ended March 31, 2019, we achieved an annual income of HK $8.494 billion, an increase of 0.8% over the same period last year; profit attributable to shareholders was HK $590 million, an increase of 28.9% over the same period last year; and earnings per share were HK $1.02, with a proposed final dividend of HK65 cents per share, with a total dividend rate of 83.3%.

It is worth noting that over the past year, the steady growth of our income mainly depends on the contribution of the mainland market. According to the data, Hong Kong business revenue fell by 0.1%, but the mainland business grew by 7%, leading to a positive growth in overall revenue.

In fact, in recent years, everyone's Hong Kong business has been saturated, mainly for stores to integrate and optimize resources. As of fiscal year 2018, the total number of stores in our fast food and institutional catering business remained at 298, providing a stable income for the group as a pillar of performance, accounting for 74 per cent of the total revenue. By contrast, the mainland business is the driving force behind the overall growth of the company, which is growing faster than the Hong Kong business.

In fact, Guele executives have also turned their attention to the mainland market, with the number of new stores opened in 2018 doubling from 2017. In other words, in 2018, a total of 16 new stores were added in Ledu, and the number of stores at the end of the year was 107.

In fact, the catering service industry in mainland China is still a big cake. In recent years, driven by the increase in consumer purchasing power, urbanization and the rise of takeout, the scale of the catering service market in mainland China is showing a trend of rapid growth. Data show that it has grown from 2.6368 trillion yuan in 2013 to 3.9644 trillion yuan, with an annual compound growth rate of 10.7%. The market size is expected to reach 6.3881 trillion yuan by 2022, with an annual compound growth rate of about 10%. Among them, leisure catering is the fastest growing part of the catering service industry. The compound annual growth rate reached 12.4% from 2013 to 2017, and is expected to maintain a compound annual growth rate of 11.1% by 2022.

Therefore, everyone is happy to reveal that in order to further accelerate the pace of growth, the Group has planned to add 20 new stores in 2019 in 2020, mainly in Shenzhen and Guangzhou. According to the analysis of Zhitong Financial APP, everyone Le had previously locked its sales position in the mainland in East China, but failed because of taste differences. However, Guangzhou and Shenzhen are adjacent to Hong Kong, with high brand recognition, similar consumer tastes, and moderate prices of 30-40 yuan per capita, giving everyone the opportunity to copy the Hong Kong model. Therefore, with the further expansion of our business in the mainland, it may further promote the further growth of our revenue and net profit.

Great happiness continues to take root in Hong Kong

The founder of Da Happy is Luo Fangxiang, the younger brother of Luo Tengxiang, the founder of everyone Le. As a brother company, the dishes and services of the two companies are very similar.

According to the Zhitong Financial APP, the first Great Happy opened at Chung on Street, Tsuen Wan, Hong Kong in December 1972, and then a Central Food processing Centre was set up in 1981 to ensure food quality and improve efficiency. Grand Happy was also listed on the Hong Kong Stock Exchange on October 9, 1991, four years after it was listed on the stock exchange.

Judging from the recent increase, everyone's happiness is obviously better than great happiness. According to the statistics of Zhitong Financial APP, since June, everyone's happiness has increased by 23.05%, and Da Happy has increased by 7.33%. Although Grand Happy did not announce the results for fiscal year 2018, we can also know one or two through the interim results of fiscal year 2018 and compared with those of everyone in the same period.

According to the APP of Zhitong Finance, in the six months ended September 30, 2018, the income of Da Happy reached HK $1.473 billion (the same as the same unit below), an increase of 4.8% over the same period last year, while the net profit was 100.7 million yuan, down 14.0% from the same period last year. In the same period, Guele realized revenue of HK $4.199 billion, up 1.7% from the same period last year, and net profit of HK $239 million, up 16.2% from the same period last year. In terms of the growth rate of income and net profit, everyone has no intention of being better.

In terms of gross profit margin, Guele's gross profit margin remains below 20% all the year round, but it has been declining year by year since fiscal year 2014 and has been happily overtaken. According to Zhitong Financial APP, in the middle of fiscal year 2018, the gross profit margin of everyone Le was 12.3%, and that of Big Happy was 13.7%. The decline in gross profit margin is mainly due to increased investment in human resources. Although the gross profit margin of Da Happy is higher than that of everyone, it also has a downward trend, down 1.4% from 15.1% in the mid-2017 fiscal year, mainly due to increased expenditure on labor, food and rent.

During the reporting period, Tai Happy operated a total of 158 shops, 295 fewer than everyone, but the income of each store was $50, 000, or $9.32 million, higher than that of Lego. Specifically, Grand Happy operates a total of 148 stores in Hong Kong, of which 14 are new, and there are 10 in mainland China, of which one is new. From the perspective of Happy's future, the company still focuses on Hong Kong, is optimistic about the development of Hong Kong's fast food industry, and is confident that encouraging results can be achieved if it continues to take root in Hong Kong. However, in the face of the huge network of sibling companies, there is still a great challenge to the happiness of similar products.

Cuihua went north to dig his own high-end pit.

As a time-honored brand in Hong Kong, Cuihua Restaurant is almost the representative of Hong Kong food culture. Every visitor to Hong Kong, except Walt Disney Company Paradise and Tsim Sha Tsui shopping, goes to Cui Wah Tea Restaurant to have a sip of rich milk tea and taste a mouthful of delicious pineapple bread and butter. With the aura of a time-honored brand, Cuihua Holdings listed in Hong Kong in 2012 as the "first share of a tea restaurant".

Cuihua Holdings also set its sights on the huge market in the mainland, but in the Cuihua restaurant with its own halo in Hong Kong, it became very embarrassing to go to mainland China. This is mainly related to the positioning of Cuihua Restaurant.

According to Zhitong Financial APP, it belongs to popular food and fast food in Hong Kong, but when it comes to the mainland, it operates as a "well-known and exquisite Hong Kong-style tea restaurant", but the meals are still mainly noodles, roast flavor and desserts, and the price increase does not increase the quantity. However, the high price means that the turnaround rate is low.

According to Zhitong Financial APP, due to the nature of fast food, the turnover rate of Cuihua restaurant in Hong Kong is very high, and the number of bills per table per day is much higher than that in the mainland. Coupled with the exchange rate difference, the price of each dish in the mainland is about 20% higher than that in Hong Kong, and the average consumption per bill in the mainland is more than twice that in Hong Kong. Obviously, the gap between this positioning and the actual content makes Cuihua restaurant do not have the advantage of performance-to-price ratio in the mainland, which naturally does not repeat its popularity in Hong Kong.

In addition, the Chinese catering supply chain and production process is complex, the cost of replication is very high, the cost of expansion is often faster than the growth rate of revenue, profits continue to be compressed. Therefore, Cuihua's substantial expansion after listing has led to an increase in the company's cost burden and a downward turn in revenue and net profit. On May 24, 2019, Cuihua Holdings issued a profit warning. It is expected that the group's after-tax profit for the year ended March 31, 2019 will decline by more than 70% compared with the same period last year, mainly due to the decrease in operating income caused by the continuous challenging business environment and the increase in business development costs and operating expenses.

In fact, in the face of shrinking performance, Cuihua Holdings also wanted to break the arm to survive. On August 19, 2016, Cuihua issued an announcement to inform shareholders about potential sellers or independent third parties to contact possible sales, announcing "selling their bodies" to the public.

Therefore, when Hong Kong catering enterprises want to make money in mainland China, they should not only be close to the tastes of mainland consumers, but also have a clear positioning.