Cafe de Coral Business to Europe free essay sample

Strategic issue: Should Cafe de Coral expand their business to the European market? [pic] Photo: Cafe de Coral at Uptown Plaza, Tai Po, Hong Kong Source of image: Wikipedia user Wing1990hk Student Name: Kam Wing Chi (10430181) Background Cafe de Coral is a well-known fast food restaurant group in Hong Kong. It owns and operates fast food chains and restaurants including Cafe de Coral, The Spaghetti House, Ah Yee Leng Tong, etc. Cafe de Coral group is also recognized as the world largest Chinese fast food restaurants, its business has grown to operate over 580 separate stores across its brands all over Hong Kong, Mainland China, Southeast Asia, North America, etc. Since 1968 Cafe de Coral opened its first restaurant in Causeway Bay, Hong Kong. There were 11 Cafe de Coral restaurants until 1980, but somehow, they were not all fully self-serving as nowadays. Since the consumer behavior back to the 1970s was traditional, self-serving was a new idea in the market, these caused a big impact to their business. Cafe de Coral management did a lot of hard works like promotion on how does the self-serving mean and work, arranging stationary staff to help the necessary customers. All these public relationship works had gained their business be back on track. In 1979, Cafe de Coral established its first food processing plant in Yau Tong, a move commonly taken to lower costs and ensure consistency. In 1986, it became the first restaurant group to be a listed company in The Hong Kong Stock Exchange. Until now, Cafe de Coral operates over 100 chain stores in he Hong Kong region. Throughout all the Cafe de Coral products til now, there are many signature dishes. Such as the â€Å"Baked Pork Chop Rice†, â€Å"Grilled Unagi (eel) Rice†, â€Å"Roasted Spring Chicken†, â€Å"Grilled Steak†, â€Å"Barbecue Meat†, etc. Many of them are still the most popular dishes among their business. Also, these products’ ingrediants are mostly imported from Europe and South Am erica. Beside their business strategic, they developed scientific managment mainly improving economic efficiency, especially in labour productivity. They created numbers of detailed and strict working regulations. The aim was to ensure foods in any chain restaurant share the same quality. Also, their bureaucracy is working as formal structure. Every restaurant is individual to the others, and each store is described as a team, the store manager is the leader and his responsiblity is to plan, organize, lead and control in Cafe de Coral in order to reach the goals. Back to the 1990s, Cafe de Coral made its first acquisition by buying the Ah Yee Leng Tong chains for $14 million HKD. A year later in 1991, it acquired The Spaghetti House, a popular chain that served HK-style Italian food. In 1996, Cafe de Coral opened up its first Bravo le Cafe restaurant and at the same year, it acquired Scanfoods, a ham processing and food distribution business. In 1998, it started another restaurant chains called Super Congee Noodle. In the 2000s, Cafe de Coral acquired China Inn, New Asia Dabao, and Olivers Super Sandwiches. Those restuarants are mainly Hong Kong based business. Beside those localized acquisitions, Cafe de Coral group also acquired their first oversea business, Manchu Wok. It is a Chinese fast food chain restuarant in United States and Canada, and operates over 200 stores. Most of the stores are in shopping mall locations. From the business strategic of Cafe de Coral group, it seems successful in the Hong Kong market. According to a statistics of Census and Statistics Department in 2011, it owned 20% of market share, which was the highest percentage among local fast food restaurants in Hong Kong. Until November 2012, the net profit of the Cafe de Coral group was HKD474 millions in 2012. However, comparing to the last 2 years of revenue, their financial net profits were remained almost same figures with HKD513 millions in 2010 and HKD514 millions in 2011. According to Forbles 2012, the market value of Cafe de Coral is worth HKD10. 4 billions. Michael Chan Yue Kwong, the Chairman of the Cafe de Coral Holding Limited, works for the group since 1984. From his major business decisions and acquisitions, it made the group became the giant in the Hong Kong fast food chain market. Somehow, the growth of business in recent years is starting to halt. However, his ambition is to make Cafe de Coral to become global organization as McDonald or KFC. Apart from Michael Chan, The Board of Directors, Lo’s Family, Sunny Lo Hoi Kwong, Anita Lo Pik Lai and Peter Lo Tak Shing are also the key persons and carrying the same ambition to lead the group into the top brand in the market. In order to achieve this, the group is deciding to make their first step to the European market. Europe has developed a taste for a variety of ethnic cuisines and Europeans have become more adventurous when it comes to eating ethnic foods, and are experimenting with several different types of food. In many countries, Chinese cuisine has become increasingly popular. According to the PR Log (Press Release) research in 2011, the Chinese and Oriental food in the United Kingdom is the largest while claiming a 42% share. Moreover, there were more than 15,000 Chinese take away or restaurants until Nov 2012. But many of them were located at some villages or small towns and only a few are in the city or town center. But currently, the European Union is in economic crisis, and it may need a long-term solution to recover. These financial debt crises happened causing many countries in a systemic banking crisis. When all the banks are forced to raise capital at the same time, this results weaker banks and an even longer recession. Also, these affected the countries outside the Euro-zone, like United Kingdom, Swiss, etc. Besides the banking system, the properties and exchange rate were hit to new historical lows. Questions 1. Cafe de Coral group will need to consider expanding their business to the European market at this time. What factors they need to be considered? |Key Persons |Pros |Cons | |Michael Chan, the Chairman|Michael has experiences in the Chinese fast food | | |of the Cafe de Coral Group|market in United States. With references of the | | | |Manchu Wok business, it is believed the market of | | | |Europe will be successful as in U. S. | | |Lo’s Family, the Board of |Ambitious to expand the Cafe de Coral into a | | |Directors of the Cafe de |global enterprise. | |Coral Group | | | |Management in Europe |As the managing style of the Hong Kong Cafe de | | | |Coral is learnt from the Western countries, there | | | |shall be no conflict if they expand business in | | | |there. | |Economics in Europe |As the properties and exchange rate are at low |The crisis of the economic in Europe needs to| | |position, investment or capital injection will |be recovered in long term, it gives the | | |surely be a bargain at this time. |shareholders many uncertain concerns and | | | |doubts. They may worry is this the right time| | | |to expand? | |Competitors in Europe |Fast food chain restaurants are many in the |There are many Chinese take away or | | |Europe, i. e. McDonalds, Burger Kings, KFC, |restaurants in many cities, they have done | | |Maryland Chicken, etc. But none of them are |and developed for years to make the right | | |dealing with Chinese cuisine or Oriental foods. taste for the customers. Cafe de Coral may | | |This new idea could bring an impact to the market. |need a long term solution to be able to stand| | | |in the market. | |European customers |Europeans have become more adventurous when trying| | | |ethnic foods, and are experimenting with several | | | |different types of food. Chinese fast food would | | | |be a new idea and first territory in market. | | |Hong Kong market |As the business in Hong Kong is becoming stable, | | | |the focus while shifting in Europe would not bring| | | |any negative impact, but morale would be raised up| | | |as the firm is going global. | 2. Based on those factors of consideration, should Cafe de Coral expand their business to the European market? Based on the considered factors, Cafe de Coral should expand their business to Europe. This is due to the success of Manchu Wok in the U. S. , which can be a good reference for marketing in Europe. Also, by applying the current management style to the Cafe de Coral in Europe, it will be a new positive impact for the fast food chain market. The economics crisis in Europe is the major negative implication, but investing the restaurants in there can be considered as another kind of investment, i. e. low exchange rate of Euro, cheap properties for purchase or rent, and also hit up the employment rate. Moreover, by considering the fast food chain restaurants, Chinese cuisine fast food is new idea in Europe. Many European are interested of trying Oriental foods, and Cafe de Coral has already developed many signature dishes no matter Western or Japanese style. Even there are many Chinese restaurants in the cities, but if more fast food chains would give the customers confidence on the taste. As the group is aiming to go global, it should raise up the shareholders and the employee morale. Once the Cafe de Coral group in entered the European market, this can satisfy the ambition of the Board of Directors. References 1. Liman, C and Kingchu. K. , 2008. 100 Marks for You. Hong Kong: Cosmos Books 2. Cafe de Coral Holdings Limited, 2012. Cafe de Coral key facts [pdf] Available at: [Accessed 30th Dec 2012]. 3. Census and Statistics Department, 2012. Report on Quarterly Survey of Restaurant Receipts and Purchases [pdf] Available at [Accessed 19th Jan 2013]. 4. Press Release Distribution, 2011. PR Log website. Chinese Food: The Most Popular Ethnic Food in Europe with 42% Market Share. [online] Available at: http://www. prlog. org/10032587-chinese-food-the-most-popular-ethnic-food-in-europe-with-42-market-share. html [Accessed 20th Jan 2013]. 5. Wing, 2010. Cafe de Coral in Uptown Plaza, Tai Po. [electronic print] Available at: [Accessed 20th Jan 2013]. 6.