BreadTalk Group Limited (SGX: CTN) is a food and beverage group with four main divisions: Bakery, Food Atrium, Restaurant, and 4orth Food Concepts. The group has close to 1,000 retail stores across 16 countries along with a portfolio of recognisable and strong brands such as BreadTalk, Toast Box, and Food Republic.
Many Singaporeans recognise BreadTalk from the many Toast Box and BreadTalk bakery outlets dotting Singapore. The group provides a wide array of fresh pastries and confectionary as well as hot local dishes. Investors who have been following BreadTalk would also have witnessed how the group has grown over the years by expanding its portfolio of brands and extending its reach to other Asian countries such as Korea and Taiwan.
Here are two interesting facts investors may not know about BreadTalk.
1. Acquisition of Food Junction
Earlier this month, BreadTalk announced the acquisition of a 100% stake in Food Junction Group (FJG) from Auric Pacific for a sum of S$80 million, funded by around 60% borrowings and 40% cash. Investors should note that BreadTalk currently owns and runs the Food Republic and Food Opera brands of food courts, with a total of 55 food courts and eight direct-operated restaurants spread out over countries such as Singapore, Hong Kong, China, Thailand, Malaysia, and Cambodia.
These food courts are parked under the “Food Atrium” division for BreadTalk, and the division generated S$78.3 million of revenue and S$7.2 million of profit before tax for the first half of 2019. FJG has a total of 12 food courts located in Singapore and three in Malaysia, with a fourth to open in 2020 in Johor Bahru. The rationale for the acquisition is to broaden BreadTalk’s reach by extending its presence into additional malls in Singapore. It will also create an additional revenue stream for the group and allow it to benefit from synergies created through the streamlining of costs and the sharing of resources.
2. New brands and food concepts
BreadTalk is also active in bringing in new brands and food concepts. Under its 4orth division, the group has introduced refreshing brands from other countries and also worked with partners to bring their brands overseas. In September 2018, the group introduced TaiGai, a premium tea brand from China with fruity cheese crowns, by opening its first Singapore outlet in NEX, Serangoon.
In December 2018, Nayuki was opened in VivoCity, and it was the brand’s first store outside of China. Nayuki is a famous cheese tea bakery cafe. In June this year, a third Wu Pao Chun store was opened in Capitol Singapore as part of BreadTalk’s partnership with the iconic brand. Wu Pao Chun is a brand inspired by Taiwanese influences, and the bakery currently has three stores in Taiwan.
A tasty investment
Investors can look forward to BreadTalk introducing even more new brands and food concepts for Singaporeans to try out. The FJG acquisition is subject to scrutiny by the anti-competition association of Singapore right now, but if it goes through, this move will enable BreadTalk to own a significant share of the food court scene in Singapore and provide it with more room to grow revenue and profit for its Food Atrium business.
The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Royston Yang does not own shares in any of the companies mentioned.