SINGAPORE (Jan 30): Restaurant chain Japan Foods Holding saw its earnings halved to $1.2 million for the 3Q19 ended December, from $2.5 million a year ago.

This was mainly due to lower revenue as well as impact from its loyalty programme, JF Reward.

3Q19 revenue fell 6.3% to $17.5 million, compared to $18.7 million in the corresponding quarter last year.

The decline was led by a $1.3 million decrease in revenue from restaurants operating under the Ajisen Ramen brand.

This was due to the conversion of a Ajisen Ramen brand restaurant to a Menya Musashi brand restaurant at Takashimaya; the closure of two outlets in Marina Bay Sands and White Sands; the temporary closure of a restaurant at Nex; and lower net sales generated from some other existing restaurants.

Revenue from restaurants operating under the Menya Musashi brand fell by $0.4 million, mainly attributable to lower net sales generated from existing restaurants.

In 3Q19, the reward points earned by members under JFH Reward amounted to $0.3 million. In accordance with the relevant accounting standard, such amount was deducted from the corresponding revenue recognised during the quarter.

As at end December, Japan Foods operated 54 restaurants, compared to 48 restaurants and one food court outlet a year ago.

Earnings per share (EPS) fell 51.4% to 0.70 cents in 3Q19, from 1.44 cents a year ago.

Net asset value (NAV) per share fell to 19.18 cents as at Dec 31, 2018, compared to 19.63 cents as at Mar 31, 2018.

As at end December, cash and cash equivalents stood at $19.4 million, excluding bank deposits of $2.5 million pledged as security for bank facilities.

“During 9M18, we had a number of store openings under new brands and along with this came renovation, manpower and other related expenses. However, we believe there will be interest in the new brands. The response has been very positive so far and we are optimistic that in the long run, these new brands will contribute healthy sales to the group,” says Takahashi Kenichi, executive chairman and CEO of Japan Foods.

Kenichi says the group has also taken steps to rejuvenate the Ajisen Raman brand, which has been in Singapore for over two decades, amid competition in the ramen space.

Looking ahead, Japan foods says it intends to continue its efforts to seek opportunities to expand its presence in Asean and Japan by way of joint ventures, acquisitions and sub-franchising of its brands.

The group on Jan 29 entered into a 50-50 joint venture with Minor Food Group (Singapore) to form Dining Collective, which will conduct the business of franchising and operating existing restaurant brands owned by Japan Foods and Minor Singapore in Japan, Thailand and China.

Minor Singapore operates the Thai Express, Xin Wang Hong Kong Café, Poulet, Buffet Town and Kiseki Japanese Buffet Restaurant brands.

“This is a major step forward for Japan Foods as it will enable us to enter the Japanese market with compelling brands that are backed by a strong partner. At the same time, we are looking forward to seeing our own brands being launched in Thailand,” says Kenichi.

Shares in Japan Foods closed flat at 45 cents on Wednesday.