Rising costs eat into Soup Restaurant's first half profits

Soup Restaurant has had a dismal first half year, with its net profit plunging 90 per cent to $150,000.

Revenue for the six months to June 30 edged up 1 per cent to $18.8 million, largely attributable to additional contribution from four new outlets which commenced operations during the period as well as improved revenue from existing outlets.

However, this was partially offset by the loss of revenue from the closure of three outlets when their leases expired during the year.

As a percentage of revenue, employee benefits expenses rose to 35.3 per cent as a result of wage revision, higher CPF contribution and foreign worker levies.

Earnings per share slipped to 0.05 cent from 0.38 cent previously while net asset value per share eased to 5.26 cents from 6.36 cents as at Dec 31.

Unlike last year when the board declared an interim dividend of 0.35 cent a share, no dividend was proposed this time round.

Soup Restaurant noted of more intense competition among the increasing number of food and beverage players.

The industry is also facing manpower shortage and rising operating costs such as rental, utilities and food costs.

To address rising food costs, the group has commenced an overhaul of its procurement system for the restaurant chain, aimed at shortening the supply chain and to reap greater economies of scale through bulk purchases.

Through this, it expects to reduce food costs significantly.