"The Return of the Dining-Out Era: Three Food Ingredient Companies Smiling in Q3"

[Asia Economy Reporter Eunmo Koo] Major food material companies such as CJ Freshway, Hyundai Green Food, and Shinsegae Food are posting strong third-quarter results as both dining out and catering demand return to normal tracks with increased outdoor activities in the second half of the year.

According to the Financial Supervisory Service's electronic disclosure system (DART) on the 12th, CJ Freshway's consolidated operating profit for the third quarter of this year was tentatively estimated at 35.2 billion KRW, a 114.9% increase compared to the same period last year. Sales during the same period rose 33.5% to 751.7 billion KRW, and net profit also increased by 44.6% to 25.1 billion KRW.

Both food material distribution and group catering businesses grew steadily, resulting in three consecutive quarters of increases in sales and operating profit. By business segment, sales from the food material distribution business targeting catering and dining-out companies reached 570.2 billion KRW, up 33.3% year-on-year. Among these, the catering channel's differentiated product strategies, such as private brand (PB) products and exclusive supply items, were cited as factors driving performance growth. In the dining-out channel, CJ Freshway successfully renewed contracts with all dining franchise clients generating monthly sales of over 500 million KRW through the third quarter, establishing a stable portfolio centered on large customers. The dining solution business, which supports new brand launches and menu development for dining franchises, is also showing gradual progress.

The group catering business recorded sales of 163.1 billion KRW, the highest quarterly figure ever, marking a 39.2% increase compared to the same period last year. In particular, the leisure and concession channels such as golf courses, water parks, and rest areas grew by about 71%. This is interpreted as a result of strengthening the leisure and concession business organizations to expand market share and enhance expertise. In the office and industrial channels, securing large customers with daily meal counts exceeding 1,000 was effective. New services such as strengthening menu operation capabilities, expanding the ready-meal takeout corner 'Snack Pick,' and launching the mobile application 'Fresh Meal,' which allows customers to check and order menus by store, are analyzed to have driven customer response.

Hyundai Green Food also posted strong third-quarter results with increased sales and improved profitability across all business sectors, including group catering, food material distribution, and dining-out businesses. Hyundai Green Food announced through a disclosure that its consolidated operating profit for the third quarter of this year was tentatively estimated at 28.3 billion KRW, a 101.6% increase compared to the same period last year. Sales during the same period rose 13.6% to 1.0155 trillion KRW, while net profit decreased by 2.01% to 31.4 billion KRW.

By business segment, operating profit in the group catering sector increased by 259.4% year-on-year to 4.1 billion KRW, with sales growing 17.2% to 205.1 billion KRW. This is attributed to the recovery of meal counts at domestic workplaces as remote work eased and improved profitability at overseas sites such as increased on-site progress in Saudi Arabia. The food material distribution sector also saw sales grow 24.7% year-on-year to 150.6 billion KRW due to continuous expansion of new orders, including the start of food material supply to military units, with operating profit increasing 54.4% to 4 billion KRW.

The dining-out business saw a 40.8% increase in sales to 49.2 billion KRW and turned to operating profit of 1.8 billion KRW as social distancing measures were lifted and overall business conditions recovered, leading to increased customer numbers. The expansion of new stores, including three Texas Roadhouse locations, also contributed. Additionally, other businesses saw sales rise 84.8% year-on-year to 8.2 billion KRW due to increased marketing and promotional activities in greeting card businesses and others.

Shinsegae Food, which has yet to announce its results, is also expected to achieve growth despite rising costs. According to financial information provider FnGuide, Shinsegae Food's third-quarter sales are estimated to increase 6.6% year-on-year to 365.8 billion KRW, and operating profit is expected to rise 29.8% to 8.3 billion KRW.

In the catering and dining-out sectors, operating performance is expected to expand due to improved market conditions compared to the first half. The catering sector has reflected the effect of increased meal counts related to reopening since the second quarter of this year, and from the second half, the contribution of additional large-scale project orders to operating results is expected to be significant. Furthermore, the recent withdrawal from low-profit sites and simultaneous transition to a business model with lower fixed cost burdens are also positive for future profit improvement. The dining-out sector is also benefiting from increased leisure concession demand. For No Brand Burger (NBB), although some raw material cost increases are expected, these are anticipated to be offset by price increases and other measures.

This content was produced with the assistance of AI translation services.