A new comer to the local fast food market
Leading local fast food operators have something to worry.
Enter Daai Fun Gwo, a unit of the blue-chip hotpot operator Haidilao. The brand quietly set up its first store in Wan Chai about a month ago.
Its undercutting cheap offering got many netizens and residents to talk about. A breakfast chicken mushroom noodle was priced at HK$15, with a HK$5 unlimited refill drink option, easily the cheapest offering one could get in the last decade.
A pork chop baked rice is priced at HK$28, some 40 per cent below that of the big three – Maxim, Cafe de Coral and Fairwood.
Right, Hong Kong consumers known for their price sensitivity are not unfamiliar with the cut-throat strategy by mainland newcomers, most notably Luckin Coffee, now bankrupted after opening more than 4,500 kiosks in just a few years in an attempt to challenge bigger rival Starbucks, which turned out to be unsuccessful.
Still, they can’t help wonder how Haidilao could finance the expensive rental at Wan Chai Road, and perhaps more outlets in Hong Kong going forward.
In fact, Daai Fun Gwo is not listed in Haidilao’s annual report but a Singapore company registry record showed it is a subsidiary of Haidilao.
It appears that this new fast food venture in Hong Kong is more an experiment than core focus.
Time will tell if this new venture will be a success.
As for parent Haidilao, the situation has been challenging.
China is where the majority of the group’s outlets are located. Haidilao had to suspend most of its mainland outlets in the first half last year due to the Covid-19 outbreak but bounced back strongly and resumed operations in summer.
Haidilao shares surged and was promoted to Hang Seng Index earlier this year. Just when everything seemed to look great, its good fortune lost steam.
Haidilao said it expects to make a profit of merely 100 million yuan in the first half. Chairman Zhang Yong apologised to investors that he had misread the pandemic impact and steep costs of opening a large number of new restaurants over past one year ate into profit.
Share prices currently are down 66 per cent from the peak.
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