New Starbucks store openings augur well for BFood unit

PETALING JAYA: New Starbucks store openings, which include more drive-thru stores, will bode well for Berjaya Food Bhd (BFood) wholly owned subsidiary Berjaya Starbucks Coffee Company Sdn Bhd (BStarbucks) to provide a better reach and service to customers, expand its market share throughout Malaysia and increase profitability moving forward.

“We also think that consumer demand for BStarbucks products can be enhanced via the revamped Starbucks Reward programme where customers’ experience is enhanced by offering more card designs with attractive benefits for its members,“said Mercury

Securities in a report yesterday, adding that BStarbucks registered revenue of RM884.2 million in FY22 (+41.4% y-o-y).

Starbucks Malaysia is one of the largest coffee chains in Malaysia with its first store opening in Kuala Lumpur on Dec 1998. BStarbucks has a chain of 356 stores as of June 30, 2022 in Malaysia of which 70 are drive-thru stores. The company plans to open between 35 and 40 new stores in FY23 with more drive-thru outlets, targeting the smaller towns, neighbourhoods, and communities, which are more convenient for customers.

BFood’s holding company, Berjaya Group Bhd effectively holds the worldwide Kenny Rogers Roasters (KRR) franchise following BGroup’s acquisition of KRR International Corp, USA in April 2008. The company has 68 KRR restaurants across Malaysia as of June 30, 2022, serving rotisserie-roasted chicken complemented with other side dishes and beverages and plans to open between three to five new stores in FY23.

“We think that FY23 sales will be stronger, driven by optimised business strategies, attractive promotion initiatives, and waning impact of the Covid-19 pandemic. BRoasters also experienced a sales rebound after diversifying its menu and reducing heavy reliance on one cost item, recording a revenue of RM71.5 million in FY22 (+29.3% y-o-y),“Mercury said.

Mercury recommended a ‘buy’ call on BFood with a target price of RM1.22 based on FY24 forecast earnings per share of 7.6 sen and price-earnings ratio of 16.1 times in line with the three years average.

“We like the stock for its attractive expansion plans, and strong same-store sales growth.”