How Does BreadTalk Group Limited Bring in the Dough?

It is important to know what a particular company does and how it makes money before investing in it. Investing in a business without such knowledge is akin to travelling to an unknown territory without a map.

On that note, let’s check out what business BreadTalk Group Limited (SGX: 5DA) is involved in and how it generates its revenue.

For the uninitiated, BreadTalk is a food and beverage company with three primary business segments, namely, Bakery, Food Atrium and Restaurant. Let’s take a look at the table below for the revenue contribution of each segment for the financial year ended 31 December 2016 (FY2016):

Source: BreadTalk Group Limited Annual Report FY2016

The Bakery segment, which brought in around 50% of total revenue, is involved in manufacturing and retailing of food, bakery and confectionery products, including franchising.

Its bakery business comprises of brands such as the eponymous BreadTalk, Toast Box, Bread Society, and Thye Moh Chan. In May last year, BreadTalk and Toast Box outlets opened for business at the new Shanghai Disney Resort, bringing the total store count to 862, as at 31 December 2016.

Moving on, the Food Atrium segment manages and operates food courts largely under the Food Republic brand. With 57 outlets in countries such as Singapore, Mainland China, and Hong Kong, the business raked in a revenue of S$158 million in FY2016.

Last but not the least, the Restaurant segment was the smallest revenue contributor at some S$150 million. This segment is involved in operating food and drinks outlets, eating houses and restaurants under brands like Ding Tai Fung, Ramen Play, and Sanpoutei Ramen. As at the end of FY2016, this division had 32 outlets in Singapore and Thailand.

In an alternative view, the following shows the revenue contribution by different geographies:

Source: BreadTalk Group Limited Annual Report FY2016

Now that we know the basics of BreadTalk Group’s revenue streams, we can then delve into other aspects of the firm such as its profitability, strength of its balance sheet, its cash-generating abilities and so on before deciding to invest in it.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Walt Disney. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.