Two leading noodles chains in Hong Kong appear to be laughing all the way to the bank for what is said to be a happy reunion.
Japanese noodle maker Toridoll plans to buy Tam Jai Samgor Mixian for an undisclosed amount, after paying 15 billion yen (US$133 million) to buy the Tam Chai Yunnan Noodle restaurant chain six months ago.
The deals, due to be completed by February, will see two rival noodle franchises – originally from the same family – united as part of Toridoll. The Japanese group plans to aggressively expand outside its home and build 6,000 outlets by 2025, mostly in China.
The takeovers will give Toridoll over 100 stores in Hong Kong and an ability to tap the fast-growing market for mixian, which originally comes from Yunnan and is made of rice noodle although seen as much heavier than glutinous rice.
Tam Jai Samgor operates 56 stores, six more than Tam Chai. The latter firm reported a profit of HK$96 million (US$12.3 million) on a turnover of HK$695 million as of the end of March 2016.
Over the same period, Samgor recorded a profit of HK$62.5 million on sales of HK$657 million. Its profit surged 40% to HK$88 million as of the end of March 2017, on a turnover of HK$789 million.
The two franchises have a colorful history. The Tam chains came from a rich Hunan family, whose assets were confiscated during the Cultural Revolution in 1966.
It took them 30 years to find a successful formula in Hong Kong – when the three brothers of the Tam family started their first outlet, Tam Chai Yunnan Noodles, combining the spicy Sichuan style with Yunnan mixian in 1996.
In four years the eatery became so popular there used to be long queues of people lining up to eat. It forced the management to put off the staff lunch until as late as 5pm.
But success created its own problems. Ten years ago, the third brother left the group to establish his own Tam Jai Samgor Mixian, while the fifth brother stayed at Tam Chai Yunnan Noodles.
Ironically, the holding company of the original group was called Jointed-Heart Catering Holdings before they equally divided up the 12 original stores. The two groups competed neck-to-neck while having a menu that was so similar many customers could hardly tell the difference.
The mixian shops caught the healthy eating trend and quickly expanded in Hong Kong, notorious for its high rentals that cut their business margins. In fact, their profitability and profit margins were higher than the major players such as the listed fast-food groups such as Cafe de Coral and Fairwood Holdings (which by the way, were two entities also split from the same family).
Now they are counting the blessing from the Japanese – and perhaps will find more time to working under one roof.