MK plots aggressive four-tack expansion
Progress made in logistics endeavours
SET-listed MK Restaurant Group remains in expansion mode, aiming to grow as fast as possible through key four strategies: joint ventures, branding, franchise purchases and mergers and acquisitions.
Rit Thirakomen, the company’s founder, said the company is in talks with 7-8 food brands for new joint ventures, focusing on middle class customers.
The company is also keen to add foreign foods to its portfolio in the very near future, he said, but did not divulge an investment budget.
“Food and food-related businesses remain promising,” said Mr Rit.
“The company’s latest strategic partnership with Laem Charoen Seafood, a 40-year-old Thai restaurant chain, is clear evidence, as the company foresees a huge potential growth for the seafood category.”
He said with MK’s logistics knowledge, professional training system and brand-building, Laem Charoen Seafood will be able to expand at a faster pace than in the past.
In early September, MK Restaurant Group acquired a 65% stake in Laem Charoen Seafood through Catapult, a 99.99% subsidiary of the group, for 2.06 billion baht.
The funding comes from working capital.
The transaction, which is expected to be completed by December this year, aligns with the group’s strategy to expand in the restaurant business.
There are 26 Laem Charoen Seafood branches in Thailand.
Last year MK teamed up with Senko Group Holdings, Japan’s second largest logistics operator, to set up M-Senko Logistics, providing integrated logistics business to cash in on Thailand’s burgeoning logistics and supply chain industry worth over 200 billion baht.
Yasuhisa Fukuda, chairman of Senko Group Holdings, said M-Senko Logistics has a 20,000-square-metre cold storage warehouse that can serve up to 12,000 pallets.
The cold storage warehouse is scheduled to open this month. Services cover warehousing, transport, forwarding and trading services for business-to-business customers, and will soon include business-to-consumer customers.
The joint venture company has spent 1.3 billion baht for the first phase of investment and another 450 million is allocated for the second phase next year to install more cold storage.
Mr Fukuda said about 80% of M-Senko Logistics’ capacity is used by MK for the storage and transport of raw materials to all food outlets nationwide, with the remainder for outside clients.
In the future, the company expects 25% of operations to be taken up by MK and 75% from outside customers. The company expects sales of 1 billion baht in the third year of operations with a minimum 15% annual growth rate in subsequent years. The annual revenue in 2025 is targeted to exceed 1.6 billion baht.
Mr Rit said M-Senko Logistics has the capacity to offer logistics services that ensure greater efficiency in transporting goods and services to customers safely
‘‘ AI will help us understand individual customer demand.
RIT THIRAKOMEN
Founder, MK Restaurant Group
and quickly.
“This is the solution for businesses that are not proficient in logistics or have no wish to handle warehousing and transport,” he said.
“Logistics and supply chain services are essential to today’s businesses, particularly those in Thailand. Businesses in several industries have clearly demonstrated growth, from e-commerce to food and drinks as well as retail. As the intermediaries between goods manufacturers and consumers, our services meet the demand for efficient transport and this demand is a factor driving the logistics and supply chain segment’s growth,” Mr Fukuda said.
Thailand’s logistics and supply chain industry is valued at 200 billion baht. Of the total, transport generates 130 billion and warehousing makes up 70 billion baht.
“Apart from logistics business, AI [artificial intelligence] is also likely to be a crucial tool for MK to expand the food business. AI will help us understand individual customer demand. Using it will keep us alive and moving forward,” Mr Rit said.
The company has the financial strength to be ready for any opportunity at any time, he said.
MK Restaurant has over 670 eateries, made up of several brands including MK, Yayoi, Miyazaki, Hakata, Bizzy Box, Le Petit and MK Harvest.
MK Restaurant revenue amounted to 17.2 billion baht in 2018, up from 16.5 billion in 2017, with net profit of 2.57 billion and 2.42 billion in 2018 and 2017, respectively.
For the first half of 2019, revenues from sales and services registered a growth rate of 6.3% year-on-year to 8.82 billion baht.
The group’s net profit for the period rose by 8.3% to 1.39 billion baht.
M shares closed yesterday on the Stock Exchange of Thailand at 75.75 baht, up 75 satang, in trade worth 40 million baht.