Restaurant chain operator Wowprime Corp (王品集團) on Thursday confirmed that its low-priced hot pot brand 12 Sabu (石二鍋) is to withdraw from the Chinese market due to mounting losses the sub-brand has incurred in that market.
Wowprime said in a statement that it has decided to close all of its sixteen 12 Sabu stores in Shanghai, as the company found it difficult to make the hot pot brand profitable amid a fierce competition in the Chinese market.
The company developed its 12 Sabu business in China through a joint venture with Philippines-based Jollibee Food Corp in 2012, with Wowprime holding a 34.52 percent stake in the venture and Jollibee owning the remainder.
In the first half of the year, Wowprime booked nearly NT$15 million (US$495,425) in losses for its 12 Sabu business in China, according to the firm’s latest financial statement.
In Taiwan, Wowprime operates fifty 12 Sabu stores nationwide, but the company did not give a sales breakdown for its hot pot business.
In June, the company said it would open eight to 10 new stores in Taiwan this year.
Wowprime’s hot pot business in Taiwan posts per-store sales of about NT$2 million per month and an operating margin of about 10 percent due to its high seat turnover rates and the company’s efforts to leverage the central kitchen system, Yuanta Securities Investment Consulting Co (元大投顧) researcher Juliette Liu (劉珮昀) said in a Sept. 21 note.
Despite 12 Sabu’s withdrawal from China, Wowprime said that would not slow down the pace of its expansion there, considering the overall growth momentum in the Chinese catering industry.
Wowprime operates six other food brands in China with a total of 144 outlets, including its flagship Wang Steak (王品台塑牛排) and Tasty (西堤) brands.
Revenue generated by Wowprime’s Chinese operations grew 5.64 percent year-on-year to NT$520 million last month from NT$490 million, accounting for nearly 44 percent of the company’s total sales last month, it said in a statement.
In the near term, the company’s strategy for the Chinese market will be focusing on its Chinese cuisine brand Madam Goose (鵝夫人), which was recommended by Michelin last month, a Wowprime employee said by telephone.
The employee, who declined to be named, said the company plans to boost the number of Madam Goose outlets in China from 12 to 16 by the end of this year and to expand its footprint from Shanghai to Hangzhou to capitalize on the growing market.
Wowprime has not released its audited earnings for last quarter. Total sales from January to last month dropped 2.8 percent year-on-year to NT$11.97 billion as sales generated by Taiwanese operations dropped 5.46 percent to NT$6.82 billion, while sales in China grew 0.96 percent to NT$51.5 billion, company data showed.
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