SugarBun on expansion mode
Fast-food restaurant chain targets to set up 40 kiosks nationwide
KUCHING: Borneo Oil Bhd-owned fast-food restaurant chain SugarBun, which has a strong base in Sarawak, is mounting an aggressive expansion plan nationwide under its new “Grab n’ Go” food kiosk concept.
According to executive director Raymond Teo Kiew Leong, Borneo Oil’s franchised division targets to set up 40 “Broasted by SugarBun” kiosks this year under the new concept. Half or 20 of the proposed kiosks will be in Sabah, 15 in Peninsular Malaysia and five in Sarawak.
“We have identified several potential locations in various townships in Pahang, Penang, Perak and Johor to roll out the new concept kiosks. We expect to open six kiosks by second quarter-2018,” he told StarBiz.
The first “Broasted by SugarBun” kiosk opened for business in Gambang, Pahang in September last year.
Teo said as the main cities were saturated with fast-food restaurants and that good locations were hard to come by, SugarBun was expanding to smaller cities where competition was less intense to capture market which has not been well tapped by fast-food operators.
Home-grown SugarBun is targetting middle-income entrepreneurs for this micro business concept.
Teo said food kiosks based on the “Grab n’ Go” concept have proven to be a significant revenue generator and offer attractive bottom lines.
“This new concept offers several advantages over full-sized SugarBun restaurants.
“As the kiosk requires a smaller space of a minimum 400 sq ft, it is easier to secure business locations and faster to set up operations, coupled with a low set-up cost.
“It is affordable for franchising (below RM300,000) for an outlet, requires less labour and has low overheads,” he added.
Teo said as the kiosk concept offered a simple menu and operation, it would be easy to manage for the franchisee.
For the customers, he said they could enjoy ease of ordering food and enhanced speed to avoid a long queue.
He said “Broasted by SugarBun” offered fresh products prepared on the spot, with affordable pricing. The bigger kiosks will provide seats for customers to dine in, while the others provide take-away service for customers.
SugarBun currently has 92 franchised restaurants, the majority of them in cities and secondary towns in Sarawak. There are SugarBun outlets in Brunei, China and Australia.
Besides SugarBun, Borneo Oil’s wholly owned subsidiary SB Supply & Logistic Sdn Bhd is the master licensee for the Singaporebased Pezzo pizza chain for Sarawak and Sabah.
Teo said there were currently 47 Pezzo outlets in Malaysia, most of them located in Sarawak and Sabah.
In the third quarter to Oct 31, 2017, the fast food and franchise division contributed RM10.26mil to Borneo Oil’s group revenue of RM20.72mil, or nearly 50%. This compares to RM10.96mil in the second quarter of 2017.
“The performance was commendable despite the many challenges facing the food franchise industry, such as lower margins, higher food costs, price competition and the generally cautious and lower spending behaviour of the customers as a whole,” said Teo.
Borneo Oil is into gold mining and limestone operation, with the mining, energy and related division chipping in RM8.8mil to group revenue in the third quarter. The property, management and operation division contributed RM1.67mil.
On Feb 13, Borneo Oil’s wholly owned subsidiary Borneo Oil & Gas Corp Sdn Bhd entered into an agreement to acquire about 5.38ha of quarry land in Ulu Segama, Lahad Datu, Sabah for RM47mil cash.
The company said the proposed acquisition, expected to be completed within two months of the agreement, was an ongoing expansion plan into limestone mining and related activities.
“With the acquisition, the company, together with its existing land bank of limestone reserves held for long-term investment, will become a substantial player in the supply of high-grade limestone resources in Sabah,” Borneo Oil said in a filing with Bursa Malaysia.
The company said the Pan Borneo Highway project, which involves 706km in Sabah, has created a great demand for construction materials, including quarry aggregates.
According to Borneo Oil, the setting up of a clinker plant in Sabah is imminent, and that the main source of feedstock for the production of clinker is limestone.
Sabah is the only state without clinker production and imports over 1.5 million tonnes of clinker and cement a year.