Soup Restaurant Group Limited has been chosen to be our case study. Soup Restaurant Group Limited was listed in 2007. This company was incorporated during the early 1990s, as a private limited company. The company’s business can be divided into 2 key brands and business units: “Dian Xiao Er” and “Soup Restaurant”. Overall, the objective of the group is to offer customers with home-cooked style food in a comfortable restaurant quality setting.
Hence both the Group’s Dian Xiao Er outlets and the Soup Restaurant outlets have its own signature dishes and showcase. However, the marketing perspective of the Group has always been the same – traditional, wholesome and distinctive family recipes like the Samsui Ginger Chicken and other “forgotten” dishes like its double-boiled soup range to attract customers and giving them a taste that will remind them of good home-cooked meals from their grandparent days. This is further extended by the outlet’s traditional decoration, reminding customers of the hawker stalls of yester-years in old Chinatown. All these combined to give the modern customer an interesting blend of old and new in a restaurant setting that is reminisce of the old with creature comforts of today.
Their business targets the young urban working adults who relish the taste of yester-years; and in a market like Singapore whereby disposable income is comparable to many first-world economies, and food being rated as a “national past-time”, the Group is able to take advantage of the market opportunities and capitalized and expand locally.
In line with their business strategies, the Group wishes to expand more outlets in Singapore, and to explore the possibility of regional business expansion. Currently the combined outlets of both the Soup Restaurants and Dian Xiao Er are about 17. Management’s objective is to increase 1-2 more outlets at strategic locations within the next 1-2 years to meet expansion plans. The Group’s management understands that in order to maximize returns, expansion must be planned and executed logically.
At the same time, the Group is seeking to revamp their existing outlets and facilities in order to retain and sustain existing customer demands and to keep the outlets attractive to diners. For such an exercise and in view of an increasing cost environment, Management has allocated and approved a budget of $500,000.00 for such a purpose. This will also help streamline current bottlenecks in operations and increase efficiency.
In addition, Management is also considering the route of M&A and/or Franchising and strategic partnership with a partner or partners. While organic growth is necessary, management is seeking a quantum leap in order to give shareholders a more attractive return. Currently, they are looking into a franchise outlet starting in Jakarta; and from there to tab on the demand to build a local brand presence in the Indonesian market. Regardless of the decision, such expansion activities will generate growth and returns for shareholders; and depending on the risk appetite of management, ultimately management will weigh the pros and cons of such a venture and progress forward.
Mr. Mok Yip Peng in his Chairman’s message via the Group’s annual report, attributed the increase of revenue to reasons like the opening of new outlets and an increased of return customer and higher consumer spending. With stable and strong cash flow, the business will be in a position to seize any opportunities for growth that the Group might be chanced upon. He also declared in this message that the dividend shares will be increased, compared to the Yr2009 payout. A 0.5 percent increase is proposed subject to the board’s agreement.
The independent auditors have audited the financial statement of Soup Restaurant Group and its subsidiaries. It is stated in the report that they have abided to the Singapore laws on auditing and discovered that the financial statement has no...
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