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BreadTalk’s revenue increase led by growth from the Food Atrium and Restaurant Divisions - 2018 Annual Report

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BreadTalk Group Limited (BreadTalk)

Source: Breadtalk

Founded in 2000, BreadTalk is a Singaporean multinational food and beverage corporation holding a portfolio of brands in the bakery, restaurant and food atrium sectors. The company has close to 1,000 outlets across 16 countries, and a global staff strength of 8,000 employees.

FY 2018 Financial Highlights:

Source: BreadTalk FY 2018 Annual Report

  • BreadTalk’s FY 2018 revenue increased by 1.7% year-on-year to SGD 609.8 million.
  • However, EBITDA for FY 2018 declined by 4.9% year-on-year to SGD 80.2 million, while Profit after Tax and Minority Interests decreased by 29.9% SGD 15.2 million.
  • This decrease was mainly due to the recognition of a SGD 9.3 million in net capital gain in FY 2017 – from the divestment of BreadTalk’s investment in TripleOne Somerset. If that divestment gain was excluded, FY 2018 Profit after Tax and Minority Interests would have been 1.1% higher than the previous year.

Performance Drivers:

Source: BreadTalk FY 2018 Annual Report

BreadTalk’s FY 2018 revenue increased year-on-year, led by growth from the Food Atrium and Restaurant Divisions, and offset by a weaker showing by the Bakery Division. Meanwhile, although the company’s new 4orth Food Concepts Division recorded a significant increase in revenue, the division continued to suffer a negative EBITDA primarily due to start-up costs.

Performance Drivers (Positive Factors)


  • Food Atrium Division

The FY 2018 revenue of BreadTalk’s Food Atrium Division rose by 5.1% year-on-year to SGD 156.9 million, as overall same store sales growth remained strong across the entire portfolio. FY 2018 EBITDA increased 24.3% year-on-year to SGD 31.2 million, while EBITDA margin improved from 16.8% the previous year to 19.9% in FY 2018. This improvement was attributed to higher revenue on the back of low stall vacancy.

During the financial year, the Food Atrium Division opened new food atriums in Shenzhen, Hong Kong and Cambodia, while closing down their only outlet in Hangzhou. The Division has also been focusing on the addition of a new revenue stream – adapting its business model into smaller store formats in shopping malls.

  • Restaurant Division

The Restaurant Division’s revenue grew by 8.2% year-on-year to SGD 152.3 million for FY 2018. This growth was driven by the addition of four new outlets – one in Singapore, two in Thailand and the company’s very first outlet in the United Kingdom. The company also shut down one outlet in Singapore after its lease expired. On the other hand, the Restaurant Division’s FY 2018 EBITDA dropped by 6.6% year-on-year to SGD 28.1 million, mainly as a result of higher staff and administrative costs related to the initial starting up of the United Kingdom operations. Consequently, EBITDA margin decreased to 18.5%, compared to the 21.4% in FY 2017. If these one-off expenses were excluded, both EBITDA and EBITDA margin would have shown an improvement.

Performance Drivers (Negative Factors)

  • Bakery Division

BreadTalk’s Bakery Division experienced a 5.1% year-on-year drop in FY 2018 revenue to SGD 282.0 million, caused by lower revenue from direct operated stores in Shanghai, Beijing and Hong Kong, as well as lower franchise revenue from China. The decline was offset by stronger revenue from direct operated stores in Singapore and higher international franchise revenue. The division also recorded EBITDA of SGD 22.6 million in FY 2018, representing a 1.8% year-on-year decline. The decline was mainly as a result of weaknesses in profitability at the China operations. Nevertheless, EBITDA margin remained relatively steady at 8.0% (7.8% in FY 2017). It was further reported that over the year, the number of direct operated outlets dropped from 240 to 221, while franchise outlets count increased from 631 to 642.

  • 4orth Food Concepts Division

The 4orth Food Concepts Division currently comprises five Sō Ramen, one TaiGai and one Nayuki outlets in Singapore; as well as four Song Fa Bak Kut Teh and one Wu Pao Chun Bakery outlets in China. The division achieved a significant increase in revenue from SGD 7.9 million in FY 2017 to SGD 14.2 million in FY 2018, but reported an EBITDA loss of SGD 2.9 million. The loss was chiefly due to pre-opening expenses incurred for the opening of several new outlets in the last quarter of 2018.

Source: BreadTalk FY 2018 Annual Report