WELIFE TECH (01703) confirms that Chinese restaurants and tea cafes will continue to operate, and is implementing strategic expansion to solidify its position in the Hong Kong dining market.

WELIFE TECH (01703) announced that the group has signed a three-year lease agreement with Jones Lang LaSalle (JLL) Limited on June 26, 2025 for a commercial complex in Kwun Tong. After the lease agreement was signed, the site immediately started cleaning and renovating. As the previous tenant also operated a traditional Chinese restaurant, the property retains the traditional Chinese restaurant decorations and equipment, reducing opening costs and time. The group expects to begin operating the Chinese restaurant business on August 17, 2025, after the renovation. According to the negotiation terms, the landlord provides discounted monthly rent including management and air conditioning fees, and offers a three-month rent-free period. The Kwun Tong Chinese restaurant has obtained all necessary licenses, including food operation, liquor operation, and fire safety licenses. The head chef, service team, and management staff have been hired. After a comprehensive assessment of foot traffic density and the favorable conditions mentioned above, the board of directors has determined that this is the best opportunity to serve office workers, blue-collar workers, and residents in the Kwun Tong business district. Since the first quarter of the 2024/25 fiscal year, the retail and catering industry in Hong Kong has faced many challenges, including but not limited to the emigration wave in Hong Kong since 2019; the increasing number of Hong Kong residents spending weekends in Shenzhen and traveling abroad more frequently; and after the COVID-19 pandemic, citizens tending to stay at home on weekdays nights. Subsequently, the catering industry has steadily recovered, factors include but are not limited to: the slowdown in emigration; social gatherings centered around dining returning to pre-pandemic levels; and an increase in mainland Chinese and overseas tourists due to various government initiatives promoting sports, arts, and cultural activities, as well as expanding the "personal travel" program to multiple cities in mainland China. To meet changing consumer preferences, the group actively attracts local customers and encourages repeat visits. The group offers more value-for-money dishes to customers and introduces a dim sum buffet during lunch hours and a Peking duck set meal during dinner hours, achieving satisfactory results. In addition, the group has capitalized on the influx of tourists mainly from mainland China, hiring chefs proficient in local Chinese cuisine and redesigning the menu to include regional dishes, along with retaining core Cantonese dishes, to cater to tourists' tastes. The new menu has also attracted local customers, as tourists are more open and interested in regional Chinese cuisines. The menu items will be evaluated quarterly based on popularity and cost to improve profitability and customer satisfaction. The group has also implemented cost-saving measures, including but not limited to: increasing flexibility in staff deployment to reduce labor costs to better meet business needs; negotiating favorable terms with new food and beverage suppliers; and strategically reorganizing restaurant portfolios to reduce leasing costs. Given the improved financial performance of the group's Chinese restaurant and cha chaan teng businesses, coupled with the gradual recovery and growth of the catering industry in Hong Kong, the group is prepared for continued development. Benefiting from positive economic indicators, rising domestic consumption, and government measures to boost tourism, the group is confident in its ability to seize emerging opportunities. Looking ahead, the group will continue to optimize its business strategies, operational efficiency, and undertake strategic expansion to consolidate its market position and drive long-term growth. In order to further expand the company's business, the group will seek to open more Chinese restaurants and cha chaan teng in the foreseeable future. To assess potential locations for new Chinese restaurants and cha chaan teng, the group will gather information from shopping center operators/owners to understand the actual and/or potential direct competitors in potential locations. The group has established a set of site selection criteria to assess the feasibility of opening new restaurants, from identifying potential locations to signing leases, and from delivering properties to opening new restaurants. As of the date of this announcement, the group confirms that the Chinese restaurants and cha chaan teng will continue to operate, and we are implementing strategic expansion to consolidate our position in the Hong Kong catering market. The group's strategic expansion and commitment to providing quality dining experiences have made significant progress, directly supporting our goal of increasing customer satisfaction, consolidating our competitive advantage in Chinese restaurants, expanding cha chaan teng business, and improving financial performance. The group believes that this is in line with our corporate objectives and will maximize shareholder value. Management currently foresees no significant obstacles to sustained performance in the foreseeable future.