BFood’s near term unlikely to be significantly impacted by uptrend prices
KUCHING: Berjaya Food Bhd’s (Berjaya Food) earnings in the near-term are unlikely to be significantly impacted by the continued uptrend in raw material prices, analysts opine.
The research arm of Maybank Investment Bank Bhd (Maybank IB Research) gathered that Berjaya Food’s average store sales and footfall has seen an uptick after food and beverage (F&B) outlets opened for dine-ins (from August 20 onwards) and Selangor and Kuala Lumpur’s transitioned into Phase 2 of the National Recovery Plan (NRP).
“We understand that average daily sales at Berjaya Starbucks have risen circa 10 per cent to 20 per cent while Kenny Rogers Malaysia (KRR) has seen double its daily sales as compared to solely delivery sales during the full movement control order (FMCO),” Maybank IB Research said.
“Higher national vaccination rates along with mandatory full vaccination status for customer entry into shopping malls have also led to better store footfall, especially on weekends.
“Despite continued uptrend in raw material prices, we do not expect a significant impact to Berjaya Food’s earnings in the near-term.
“Long term hedging is in place for certain ingredients (for example, milk) and Berjaya Food has implemented strategies to simplify its packaging in order to defend its margins.
“In light of rising poultry prices, Berjaya Food has made product price adjustments to its KRR menu but has chosen not to pass on higher costs to customers for Berjaya Starbucks at this juncture.”
Going forward, Maybank IB Research expected an improvement in sales mix at Berjaya Starbucks with customers being more comfortable visiting brick-andmortar stores against purchasing items on delivery platforms.
The research arm noted that margins for delivery sales are circa 20 per cent lower than instore sales.
“At present, in-store sales contribute circa 53 per cent of overall sales with 25 per cent and 22 per cent from drive-thru and delivery sales respectively.
“Note that delivery sales represented circa eight per cent to 10 per cent of sales before the pandemic began.”