This is an English adaptation of a FoodBud historical article originally published on October 7, 2021.
According to Tam Jai's Facebook-sourced listing update cited in the original article, Tam Jai International opened its first trading day down 9.91% at HK$3.00, closed at HK$3.08, and had a market value of HK$4.1 billion.
On October 7, 2021, Tam Jai International listed on the Main Board of the Hong Kong Stock Exchange. The company issued 335 million shares globally before any over-allotment option, at HK$3.33 per share, raising about HK$1.116 billion before over-allotment.
If the over-allotment option was exercised, Tam Jai International could issue up to an additional 50.251 million shares and raise about HK$167 million more.
Tam Jai International is a self-operated chain restaurant group focused on mixian rice noodles. It operates two brands: Tam Jai Yunnan Mixian and Tam Jai SamGor Mixian. The first Tam Jai restaurant opened in 1996, giving the brand a 25-year operating history by the time of listing.
Chairman and CEO Lau Tat Man said the company would use big data for more precise marketing and launch mobile ordering, with a long-term ambition to take Tam Jai worldwide. In an interview with Ta Kung Pao, he said Tam Jai was a rare Hong Kong brand and that its Hong Kong-style cart noodle model could have overseas potential.
Toridoll Holdings CEO Takaya Awata also said he had high expectations for the Tam Jai and SamGor brands, and was pleased to see Tam Jai International grow from a neighborhood noodle shop into a multinational casual restaurant chain. He expressed confidence in new markets including Japan and Australia.
According to Euromonitor data cited in the prospectus, based on 2019 revenue Tam Jai International ranked first in Asian noodle specialty restaurants with a 58.5% market share, second in fast-casual restaurants with a 7.4% share, and fifth in casual restaurants with a 2.5% share.
Tam Jai and SamGor's mixian products originated from an adapted version of Yunnan crossing-the-bridge rice noodles, with inspiration from southwestern Chinese cuisine. The menu combines dozens of ingredients including meats, meatballs, vegetables, mushrooms, and soy products. Customers can choose from six soup bases and 10 spice levels. Signature soup bases such as mala and charred chili, and dishes such as bandit chicken wings, became customer favorites.
Market research cited in the article said Tam Jai and SamGor's brand equity index rose by 23% and 36% respectively in 2019 and 2020. The two brands have distinct soup-base flavors and positioning, giving each its own customer following.
In May 2017, Japan's Toridoll Holdings announced the HK$1.0 billion acquisition of all equity in Tam Jai Yunnan Mixian. In December 2017, Toridoll confirmed the HK$1.11 billion acquisition of Tam Jai SamGor Mixian. The founding Tam family fully exited.
Toridoll is an Asian foodservice operator with brands including WOK TO WALK in Europe, Malaysia noodle chain Boat Noodle, UK ramen brand SHORYU, and Marugame Seimen, which is familiar to many Chinese consumers.
After Toridoll took control, Tam Jai International recruited Lau Tat Man from Hong Kong fast-food operator Cafe de Coral to chair the board and serve as CEO. Lau worked at The Peninsula Hong Kong from 1988 to 1996, leaving as assistant general manager of The Verandah, then worked at TGI Friday's before later serving as managing director at Cafe de Coral.
Before listing, Tam Jai International's shareholding structure showed Toridoll Hong Kong directly holding 99.8% of the company. Toridoll Hong Kong was wholly owned by Toridoll Japan, a Tokyo Stock Exchange-listed company under stock code 3397. Mr. Awata, together with T&T, SMBC Bank, and his spouse Mrs. Awata through T&T and SMBC Bank, controlled about 48.69% of Toridoll Japan. Toridoll Hong Kong, Toridoll Japan, Mr. Awata, Mrs. Awata, and T&T were regarded as controlling shareholders.
For the fiscal years ended March 31 in 2019, 2020, and 2021, Tam Jai International reported revenue of HK$1.556 billion, HK$1.691 billion, and HK$1.795 billion respectively. Net profit was HK$198 million, HK$191 million, and HK$288 million respectively.
For the fiscal years ended March 31, 2019 and 2020, average daily revenue per restaurant was HK$41,314 and HK$40,603. Total customer counts were 29,068 and 28,937. Average daily customers per restaurant were 772 and 695. Average spend per customer was HK$53.5 and HK$58.4. Average table turnover was 5.5 and 4.8 times per day. Average daily bowls sold per seat were 7.0 and 6.5.
Despite Hong Kong's social movement in the second half of 2019 and the pandemic from 2020, Tam Jai's total customer count did not fall sharply. In the fiscal year ended March 31, 2021, customer volume exceeded the same period in 2019 and rose 6.2% from 2020. The main driver was growth in delivery and takeaway orders. In fiscal 2019, delivery and takeaway orders totaled 6,227, equal to 30% of dine-in orders. By fiscal 2021, delivery and takeaway orders had reached 15,130, fewer than 500 orders below dine-in.
For the nine months ended December 31, 2020, the group recorded net profit of HK$231.6 million, helped by HK$125.6 million in government subsidies and HK$13 million in rent concessions.
Dine-in and takeaway moved in opposite directions, while overall order volume in Hong Kong stabilized. Store growth also slowed after a rapid expansion phase. This pushed Tam Jai International to seek growth outside Hong Kong, with target markets including mainland China, Singapore, Japan, and Australia, all of which have large Chinese populations or established demand for noodle products.
Hong Kong was Tam Jai International's home market, accounting for 97% of restaurants. As of April 2020, Hong Kong also contributed more than 97% of the company's revenue and profit.
Euromonitor projected Hong Kong's fast-casual restaurant market by revenue to grow from HK$22.9 billion in 2019 to HK$25.4 billion in 2024, a compound annual growth rate of about 2.1%.
Proceeds from the listing were expected to be used to expand restaurant networks and central kitchens in Hong Kong, mainland China, Singapore, Japan, and Australia, and to implement information and technology infrastructure including customer relationship management, voice ordering, and enterprise resource planning systems.
According to the prospectus, Tam Jai International planned to open about 44 new restaurants in Hong Kong, 55 in mainland China, 24 in Singapore, 25 in Japan, and 15 in Australia by March 31, 2024.
The payback period for a new Tam Jai Yunnan Mixian store was about 6 to 19 months, while Tam Jai SamGor stores had a payback period of 4 to 19 months. Lau explained that some SamGor stores were smaller, while many Tam Jai outlets were in business and leisure districts where the pandemic slowed payback.
The prospectus devoted significant discussion to market prospects in Hong Kong, mainland China, Singapore, Japan, and Australia. Based on the store plan, the largest priorities were Hong Kong and mainland China, followed by Singapore and Japan. The biggest expansion bet was mainland China.
The article argued that Hong Kong's market ceiling was clear after the social movement and pandemic, given economic pressure and limits of geography and population. Consumer foodservice revenue fell from HK$121.1 billion in 2019 to HK$80.1 billion in 2020.
It compared Helens, a bar chain listed in Hong Kong, with Hong Kong-based Pacific Bar. Pacific Bar had HK$126 million in revenue in fiscal 2016 before listing in Hong Kong in 2017, but its market value never exceeded HK$300 million at its peak and later fell to just over HK$40 million. Helens, by contrast, had RMB818 million in 2020 revenue and listed with a market value of HK$30.3 billion. The point was that similar businesses can have very different capital-market trajectories depending on geographic growth markets.
Hong Kong companies often pursue internationalization by using Singapore as a bridge to Southeast Asia, while also expanding into Japan, Australia, and mainland China.
For Tam Jai International, mainland China represented the largest planned expansion. The article noted that a Hong Kong brand expanding back into mainland China had room for imagination but also meaningful difficulty: Hong Kong culture was no longer at the front of mainland consumer trends, and competition in noodles and rice noodles was intense.
CCTV Finance had reported an incomplete tally that, in the first half of that year, at least eight noodle chain brands received financing totaling more than RMB1.0 billion. Data cited in the article said snack and fast-food outlets had the largest share of China's restaurant store count, with noodles and rice noodles accounting for more than 20% and approaching one million stores.
On July 8, 2021, Chinese noodle fast-food brand Hefu Noodle completed nearly RMB800 million in Series E financing. Since 2015, Hefu Noodle had raised more than RMB1.6 billion, with investors including Longfor Capital and Tencent Investment.
The article also noted that competition was intense not only in offline noodle restaurants but also in online noodle products. Because noodles and rice noodles are convenient and fast, instant noodle and rice-noodle products also created some pressure on physical restaurants.
Tam Jai International's successful Hong Kong listing as a mixian-focused chain restaurant may have been especially encouraging for mainland China's rice-noodle and noodle-chain operators.
Note: IPO, valuation, financing, market-size, payback, and expansion-plan figures are historical and reflect the article's 2021 context.