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BreadTalk Group to broaden brand mix as bakeries feel the pinch

May 7, 2018

Breadtalk In Sentosa Island, Singapore

Diminished returns from BreadTalk Group’s bakeries in Hong Kong and Mainland China saw the division’s sales slip 4.5 per cent in the first quarter of this year.

However, group revenue rose 0.5 per cent to S$148.5 million (US$111.55 million) as other divisions compensated. And on a like-for-like basis, BreadTalk’s core food and beverage business posted an increase in net profit of 89.4 per cent, from $1.6 million to $2.9 million.

“This was attained through the group’s continual focus on pursuing sustainable growth and eliminating underperforming assets which improved earning quality,” explained chairman Dr George Quek.

“We will continue to identify new growth opportunities through joint-venture partnerships and invest in talent development. Through higher operational efficiencies, we remain well positioned to pilot through a challenging food and beverage retail landscape this year,” he said.

During the quarter, the group brought forward the closure of eight bakery outlets in China and one Food Atrium outlet in Hangzhou. At the end of the quarter, BreadTalk had 254 Chinese franchise outlets across 28 cities compared with 278 outlets across 36 cities the same time a year earlier.

Quek said during the rest of this year, BreadTalk will continue to diversify its business mix and portfolio, while remaining agile in managing underachieving stores, introducing new Direct-Owned Restaurant (DOR) concepts for its Food Atrium division, and take brands such as Song Fa Bak Kut Teh into China.

Restaurant expansion

BreadTalk’s restaurant division’s revenue rose 6.2 per cent to $36.9 million with the addition of three more outlets – one in Singapore and two in Thailand. Pre-tax earnings improved by 24.4 per cent to $8.7 million despite higher staff and administrative costs in the lead-up to the opening of its first Din Tai Fung outlet in the UK, scheduled for the final quarter of this year.

The new 4orth Food Concepts business achieved revenue of $2.7 million during the quarter.

It now comprises five So Ramen outlets in Singapore and one Song Fa Bak Kut Teh (“Song Fa”) outlet in Shanghai, China.

Taiwan foray

In March, BreadTalk entered into a joint venture agreement with Taiwanese brand, Wu Pao Chun Bakery to take its products into four Mainland China cities: Beijing, Shanghai, Shenzhen and Guangzhou. There are further plans to expand the joint venture into Singapore and Hong Kong.

March also saw the debut of BreadTalk Group’s Toast Box brand into Indonesia following a JV with Pura Indah Berkat.

BreadTalk now has close to 1000 retail stores spread across 17 countries and territories, its brand portfolio comprising BreadTalk, Toast Box, Food Republic, Din Tai Fung, Bread Society, Thye Moh Chan, The Icing Room and So. The group owns bakery outlets in Singapore, China, Malaysia, Hong Kong and Thailand as well as franchised bakery outlets across Asia and the Middle East. It also owns and operates the world-renowned Din Tai Fung restaurants in Singapore and Thailand, as well as the Food Republic food atria in Singapore, China, Taiwan, Hong Kong and Malaysia.

Source: Inside Retail Asia

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