Little Sheep cuts new outlets target by 33 percent
Updated: 2009-05-19 07:10
By George Ng(HK Edition)
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HONG KONG: Little Sheep Group Ltd, a mainland-based hot-pot restaurant chain operator, said yesterday it has slashed by 33 percent the number of new restaurants that it plans to open this year because of uncertainties posed by the current global economic downturn.
"We have adjusted our operational plans for 2009 amid uncertainties brought by the economic downturn," Chief Executive Officer Lu Wenbing told reporters yesterday after the company's annual general meeting in Hong Kong.
"The adjustment was made in terms of the pace of opening new restaurants," he said.
The expansion target for this year has been revised to 40 new restaurants from the 60 set during the company's initial public offering last June but the capital-expenditure budget remains at around 1.8 billion yuan, he said.
The pace of expansion will remain basically the same as last year despite the downward revision, he said, noting that the company opened 37 new restaurants in 2008.
The company, which has a 6 percent share of the restaurant market on the mainland, according to researcher Euromonitor International, posted a 41 percent growth in net profit to 129 million yuan last year.
Despite the economic uncertainties, the company is still confident of achieving its target of a 5-percent growth in same-store sales this year, said Chief Operating Officer Yeung Yiukeung.
He said same-store sales grew by a single-digit percentage in the first five months of this year compared with the same period of last year. He declined to give an actual figure.
CEO Lu said news about swine flu and fears about an epidemic haven't affected Little Sheep's business.
"Our operation still runs normally so far," he said, adding that the company has taken some measures to maintain hygiene.
He also played down the likely impact of a potential swine flu epidemic, believing that any swine flu outbreak here may be much less severe than the SARS pandemic of 2003.
Wang Daizong, Little Sheep's chief operating officer, said the company will benefit significantly in terms of management and operational expertise and experience from its new investor, US restaurant operator Yum! Brands, which controls fast-food chains such as KFC, Pizza Hut and Taco Bell.
Yum! Brands said in March that it has agreed to buy about 20 percent of Little Sheep for $63 million from UK private equity firm 3i Group and other sellers.
Wang said Yum! will nominate two directors to Little Sheep's board of directors upon completion of the deal but it will not interfere in Little Sheep's daily operation.
Wang does not rule out the possibility of Yum! increasing its stake in Little Sheep in the future, but he stressed that there have no talk about this issue as yet.
Little Sheep operated 375 restaurants on the mainland by the end of 2008, of which 127 were company-owned.
(HK Edition 05/19/2009 page16)