GROWTH IN most sectors of the Chinese economy is slowing but Oceanus is creating a new sub-sector – gourmet abalone fast food. It is venturing into setting up a abalone fast-food chain!
The global leader of onshore-farmed abalone has inked a joint venture deal with gourmet seafood restaurant operator, Ah Yat Abalone Group, to set up the fast food chain.
At “Ah Yat World”, diners can expect to pay Rmb 50 or less for an abalone set meal, compared to Rmb 500 in a fine restaurant like Ah Yat Abalone Forum Restaurant. Details of the fast food menu will be finalized at a later date.
Oceanus and Ah Yat will also collaborate to distribute processed abalone worldwide.
Oceanus has set aside S$10 million to expand into downstream food and beverage.
Oceanus will own 70% in the joint venture company, Oceanus Food Group Pte Ltd, which will operate 2 subsidiaries in China:
(1) Zhangzhou Oceanus Food Co Ltd, a processing central kitchen that will vacuum pack, can, dry and cut abalone for worldwide distribution; and
(2) Oceanus (Shanghai) Restaurant Management Co Ltd will operate the “Ah Yat World” fast food chain.
Gourmet yet affordable
”This recession hit the well-to-do first folks first, so diners at fine restaurants will be looking for more affordable alternatives,” said Oceanus’ executive chairman, Dr Ng Cher Yew at the signing ceremony last Friday for the joint venture.
Its offering will enhance the fast food scene in China, which has a reputation for clean, fast, consistent quality, and value-for-money food service standards, Chinese fast food is also nutritious and delicious. With the abundance of cheap labor, fast food may not even necessarily be self-serviced.
The tough standards are an evolution of cut-throat competition on China's F&B scene.
Fast food appears to weather recessions well.
Revenues of Café de Coral Group, which operates over 500 food outlets worldwide, has grown unabated each year since its listing on the Hong Kong Stock Exchange more than two decades ago.
The leading Chinese fast food chain grew top line 10% yoy to HK$4.3 billion for the financial year ended 31 March 2008. Its operating profit margin was 11.2%.
Catering to China’s huge middle-income population of one billion enabled Café de Coral Group to grow segment revenues from China by 40% yoy to HK$441 million for FY08. It is also in a net cash position.
”Fast food is a cash business,” noted Dr Ng, referring to the practice of diners settling the bill immediately.
Oceanus, which announced last month that its 3Q08 net earnings had multiplied 5-fold yoy to Rmb 158.7 million, is set to be the next prolific player in Chinese fast food.
Its management believes “Ah Yat World” will be the world’s first abalone fast food chain.
Unlike most fast food chains, Dr Ng says there are two entry barriers to abalone fast food.
Firstly, fastidious chef preparations pander to those who crave fine dining. That is why Ah Yat, with its famed secret recipes, was roped in to operate the food outlets and central processing kitchen.
The second barrier is procuring abalone supply. The prohibitive cost of abalone has so far prevented abalone from being made commercially available as fast food.
Supply is not a deterrent for Oceanus, who has mastered abalone-breeding techniques. It had 17,500 abalone breeding tanks as at 30 September 2008, and is on track to increase this to 20,000 tanks by year-end.
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