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1 Metric That Reveals BreadTalk’s Sales Efficiency

I’ve written previously about one useful metric, the profit before tax (PBT) margin, which can help investors analyse and gain better insights into BreadTalk Group Limited (SGX: CTN) and its business divisions. The PBT margin shows how effective each division is in controlling costs, but it does not touch on the revenue aspect. Investors who need to understand BreadTalk’s sales efficiency can turn to another metric for that.

As BreadTalk has conveniently disclosed its total number of outlets by division, I simply took the sales per quarter for a division and divided it by the number of outlets (at quarter-end) to determine the sales per outlet. This information is compiled in the table below.

Sales revenue by outlet

The above data is interesting as it shows the revenue for each outlet over two quarters. For the bakery division, the sales per store have improved slightly but are considered “low” if we compare the number to other divisions. Understandably, this is because the value of items in the bakery division is generally lower, and thus each outlet’s sales generation is also correspondingly lower.

The 4orth division saw the biggest jump in revenue per outlet. This division consists of new food and beverage concepts that BreadTalk has introduced progressively to the public and includes brands such as So Ramen, TaiGai, and Song Fa Bak Kut Teh. As there is a low base of outlets here, any increase in sales will have a dramatic effect on sales per outlet.

A final interesting insight is the absolute sales per outlet. The restaurant division has the highest sales per outlet at around S$1.35 million, even though the bakery division still constitutes the bulk of BreadTalk’s overall revenue pie. This is due to the high spend per customer for the restaurant outlets, as the food items there are also of higher value. Hence, it would make sense for BreadTalk to consider opening more restaurants as these have the highest sales per outlet and would boost overall sales more effectively than if BreadTalk opened a new bakery or food court.

Observing trends over multiple quarters

Investors who have the time and inclination may also wish to compile the sales per outlet over five or six consecutive periods to see if sales efficiency is improving for each division — and which division contributes the highest sales per outlet.

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The information provided is for general information purposes only and is not intended to be personalized investment or financial advice. Motley Fool Singapore contributor Royston Yang does not own shares in any of the companies mentioned.