Fairwood's annual results briefing rarely makes dramatic headlines. This year (30 June 2026) was no different — management's remarks were calm: no price rises for now, costs well under control, and still room to talk to landlords.
But take those lines apart one by one and you'll find that each piece of "jargon" hangs off a formula. And many small-shop owners have never even heard of these formulas, let alone calculated them.
Key Takeaways
- The number behind "no plans to raise prices for now": food cost ratio — whether you dare hold your prices depends on whether you can calculate this percentage.
- The number behind "still room to negotiate rent reductions": rent-to-sales ratio — without data you have no leverage; a "feeling" isn't enough.
- The number behind "cost structure has stabilised, with room to optimise": a cost structure you can actually map — if you can't draw yours, there's nothing to optimise.
- The real difference between a big group and a small shop isn't just scale — it's whether you can see and measure your own numbers.
What Was Said at the Results Briefing
According to Yahoo Finance's report on Fairwood's FY2025/2026 results briefing, management made several remarks worth noting:
- "No plans to raise prices for the time being"
- "Food costs are well managed; the 2025/2026 cost structure has stabilised considerably, and there is still room to optimise"
- "There is still room to ask landlords to keep lowering rents"
- "In the Greater Bay Area, as long as the rent-to-sales ratio is kept right, there is room for profit to improve"
Add the expansion plan — 4 to 8 new Hong Kong stores and 10 to 14 across tier-one and tier-two Greater Bay Area cities — and you have a listed group, still expanding, saying all this with remarkable calm. That calm isn't bravado. It's arithmetic.
Line One: "No Plans to Raise Prices" — Can You Calculate Your Food Cost Ratio?
Daring to hold your prices isn't a matter of nerve. It rests on the most basic formula in the business:
Food cost ratio = food cost ÷ revenue
Fairwood can say "no plans to raise prices" because it knows, in real time, where its food cost ratio sits and whether it's under pressure. Flip that around: if you can't say whether last month's food cost ratio was 28% or 35%, you're in no position to declare "no plans to raise prices" — all you're really saying is "I'd rather not think about it."
If you can't see your cost ratio, you can only guess; and guessing usually ends one of two ways — "raise prices because everyone else did" or "too scared to raise at all". Neither is a decision based on your own numbers. (For how to calculate food cost ratio and what a healthy level looks like, see this guide: Restaurant Cost Control — 4 Decisions to Bring Food Cost from 41% Down to 30%.)
Line Two: "Room to Negotiate Rent Cuts" — Can You Calculate Your Rent-to-Sales Ratio?
When Fairwood says "there is still room to ask landlords to keep lowering rents", that isn't corporate swagger. It's because they can calculate exactly where their line sits:
Rent-to-sales ratio = monthly rent ÷ monthly revenue
| Rent-to-sales ratio | What it roughly means |
|---|---|
| Around 15% | Healthy — double-digit net margin still possible |
| Around 25% | Break-even — not a dollar of profit |
| Above 25% | Very likely losing money, and even tight food-cost control won't claw it back |
We unpacked this "≈15% healthy, ≈25% break-even" framework in the Deluxe Restaurant piece. That "room" management talks about isn't a feeling — it's a number you can calculate, and your counterparty doesn't know you can. Walk into a rent negotiation unable to state your own rent-to-sales ratio, and you're not negotiating with data; you're begging with words.
Line Three: "Cost Structure Has Stabilised, With Room to Optimise" — Can You Map Yours?
"Cost structure" sounds lofty. It's actually simple: take every expense line in your shop and work out what percentage of revenue it eats. For example:
| Expense line | Share of revenue (illustrative framework, not Fairwood's actual figures) |
|---|---|
| Prime Cost (food + labour) | Around 58% (top-tier operators) |
| Rent | Location-dependent, 15%–25% |
| Utilities and other overheads (insurance, maintenance, delivery commissions) | Around 16% |
When Fairwood says "the cost structure has stabilised, with room to optimise", it means they can produce that table — and interrogate it line by line: which line can still be squeezed? Which has hit its floor? That's what "optimising" actually means — not a slogan, but decisions made against numbers, item by item.
The most common blind spot for small-shop owners isn't refusing to optimise — it's never having drawn the table in the first place. Without it, what you're optimising is an impression, not your books.
Where Does a Big Group's Confidence Actually Come From?
Fairwood can sit calmly through a results briefing not because its shops are bigger, more numerous, or better branded. It's because they have systems that let management answer three questions at any moment:
- What is our food cost ratio right now?
- What is our rent-to-sales ratio right now?
- Of every dollar of revenue, how exactly is it allocated across each expense line?
The difference between a small shop and a big group isn't just outlet count or brand power — it's whether you can see and calculate these numbers. If you can, you've earned a seat at the table with your landlord and your suppliers. If you can't, they set the terms.
What Our System Does to Help
What we do is very direct: we turn those three numbers from "jargon you only hear at earnings calls" into live figures you can open and read at any time.
- Real-time food cost ratio: no waiting for month-end close — know at any moment whether you're at a healthy or dangerous level.
- Rent-to-sales ratio tracking: know your walk-away line well before the lease renewal conversation starts.
- Cost structure at a glance: see how every dollar of revenue is allocated in one table, without totting up invoices by hand.
Fairwood's confidence wasn't born; it was built — on the ability to see and to calculate. That ability shouldn't belong only to big groups.
Next time you hear earnings-call "jargon", don't tune out. Take it apart — you'll find it describes the same numbers your shop faces every day. The only difference is they can calculate them, and you can't. Yet.
FAQ
How do I calculate food cost ratio?
Food cost ratio = food cost ÷ revenue. For most Hong Kong restaurants a healthy level is roughly 25%–40% (fast food and two-dish-rice shops 25%–30%; full-service and fine dining 35%–40%). If you can't calculate this number, you can't know whether you can afford to hold your prices.
How do I calculate rent-to-sales ratio, and what counts as healthy?
Rent-to-sales ratio = monthly rent ÷ monthly revenue. As a rule of thumb, around 15% is healthy; at roughly 25% you break even and earn nothing; above that you are very likely operating at a loss. This number is your leverage in any rent negotiation — a feeling is not.
What is a "cost structure" and why should I be able to map mine?
Your cost structure is every expense line — Prime Cost (food + labour), rent, utilities, other overheads — expressed as a percentage of revenue, laid out as a table or chart. If you can't map your own cost structure, you can't know which line is the real problem, and any "optimisation" is guesswork.
Why can a big chain talk so calmly about these things?
It isn't just scale. Big chains have systems that let them see and calculate these numbers in real time. The gap between a small shop and a big group isn't only the number of outlets — it's whether you can see and measure your own numbers. That is the real barrier to entry.
Sources
- "Fairwood: no plans to raise prices for now; still room to discuss rent reductions with landlords" — Yahoo Finance HK (30 June 2026, in Chinese)