Potential white knight emerges for Dimbulah Coffee, says fate rests on lease rental terms

Singapore

THE number of outlets that Dimbulah Coffee can retain will depend on being able to strike "fair terms" at each location, Takuya Yoshii, a businessman linked to key backers of the cafe operator and potential white knight, told The Business Times (BT).

"We are seriously damaged with Covid-19, as all of our outlets are only located at office buildings in the CBD area or at Raffles Hospital, where crowd traffic is still below 50 per cent compared to pre-Covid levels," Mr Yoshii said.

Mr Yoshii has plans to refresh the coffee chain's offerings and even expand to Japan. But first, he will need to deal with the restructuring.

On Tuesday, BT reported that Dimbulah will exit three of its dozen-odd outlets by May 1, faced with liabilities of S$4.4 million as of end-2020.

Sources said that the coffee chain's operator, CW2001 Pte Ltd, filed for restructuring and last week was granted a two-month debt stay against creditors.

CW2001 fell behind on rental payments with its landlords, with arrears of under S$800,000 as at end-February, according to multiple sources.

Two landlords, Raffles Hospital and Royal Group Holdings, filed lawsuits against it in March, with claims for over S$267,000 and S$81,400 respectively.

The three outlets that the coffee chain will cease operations at are Raffles Hospital, Sofitel So at 35 Robinson Road and the office building 18 Robinson Road. The landlords of Sofitel So and 18 Robinson Road are Royal Group and Tuan Sing Holdings unit Superluck Properties respectively.

Raffles Hospital declined to comment, while Royal Group could not be reached by press time.

When BT visited 18 Robinson Road on Monday evening, the premises had already been vacated. Tuan Sing told BT that it had reached a settlement with Dimbulah outside of court, but declined to elaborate.

Meanwhile, Dimbulah's outlet at Guoco Tower had a "closed" sign on the door on Monday, but GuocoLand declined to comment on the matter.

Mr Yoshii said that he plans to purchase intellectual property in the scheme of arrangement to creditors, "so we can push up the payout ratio to the creditors".

Asked whether he will keep the Dimbulah branding, he replied: "Although we may change our brand name in the near future before expanding outside Singapore, I'll keep the brand for the time being."

Mr Yoshii is the chief executive of Fonz International, a Singapore entity with a 20 per cent stake in CW2001, according to regulatory filings.

Fonz International also owns Suju, a Japanese restaurant at Mandarin Gallery, he said.

Mr Yoshii also said that he is a 50 per cent shareholder of the Japanese entity Fonz Inc, which owns 51 per cent of CW2001.

He added: "As a white knight myself, I wish to keep all of the other stores, since I can expect most of them to be profitable when the crowd is back to 100 per cent. However, I can't bleed again after this scheme of arrangement."

"I am asking for a fair rebate from all of those landlords in order to continue the business until our crowd is back to pre-Covid levels, as our rates are agreed based on the traffic we could expect by then."

Adding that he is not asking for low rentals per se, he pointed out: "We are happy to pay high rents if there is traffic balanced with the rate. If the traffic is down by 50 per cent, we need our landlord's support to reduce the rent by 50 per cent."

He added: "Needless to say, we would still stay in the red during the period, as our business has other fixed costs. The number of outlets I can retain depends on how I can get these fair terms at each location."

But Mr Yoshii still sees overseas expansion as a possibility. He said that he has engaged with a property in Karuizawa in Japan's Nagano prefecture to introduce a Dimbulah flagship store in 2022.

Meanwhile, his investment plan after the scheme is to improve food offerings, tapping on his background in F&B. According to the website of Fonz Inc, its businesses in Japan include bakery chains City Bakery and Sawamura.

Prior to the pandemic, Mr Yoshii had already wanted to bring Japanese bakery concepts to Singapore. "I believe we should go ahead with the plan now at the location where we can confirm the crowds (coming) back," he said, adding: "It would be great to see people enjoy City Bakery or Sawamura in Singapore. I'm expecting to cross-sell those sandwiches and pastries in Dimbulah stores."

Separately, Mr Yoshii plans to expand his other restaurant business Suju, which has been around for over 12 years, with a "very good reputation", Mr Yoshii said. "I believe we can achieve the same reputation with Dimbulah, City Bakery or Sawamura if we could put the same effort in our quality."

According to regulatory filings, CW2001, formerly known as Dimbulah Coffee (S) Pte Ltd, was incorporated in 2001. It changed its name recently, on March 26, regulatory filings show.

Once a rising star in Singapore's F&B scene, Dimbulah was originally founded by entrepreneur Christopher Wanden. Its ownership subsequently changed in 2018 to the current shareholders.

Dimbulah's next court hearing will be in May. The company is represented by Focus Law Asia's Mark Tan, according to court records.

With additional reporting by Leila Lai

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