No store closures or staff cuts in HK with pick-up in sales: BreadTalk

Singapore

HOMEGROWN BreadTalk Group is weathering the storm in Hong Kong, despite ongoing political turmoil in the city.

"Looking at our sales data for the quarter, it is quite discouraging. But in the past two weeks, we have seen better sales improvement and no closures as things have gotten more stable," said BreadTalk Group's deputy chief operating officer Jenson Ong.

Mr Ong spoke to The Business Times (BT) earlier this week on Monday from Hong Kong, where he is overseeing operations.

Protesters had taken to the streets a day earlier to mark the sixth month of citywide protests. The march, which had received prior approval from Hong Kong authorities, was largely peaceful with hundreds of thousands participating.

BreadTalk has been in operation in Hong Kong for 15 years, with its first outlet launched in 2005. The group operates food courts under the Food Republic brand, along with its BreadTalk bakeries and Toast Box coffee shops.

In an October interview with BT, the group mentioned a 10 to 40 per cent decline in sales across its Hong Kong operations, depending on the area where the outlets are located.

The city contributed 8 per cent of the group's revenue in its FY2018 report.

Despite lower sales, BreadTalk maintains that it has not laid off staff in its Hong Kong outlets, nor is it planning to.

"This is not the right time for BreadTalk to do so - our staff still have a living to make. We take care of our staff as family," Mr Ong said.

He stated that it would be difficult for the group to exit from the Hong Kong market completely, as existing leases for its Hong Kong outlets have three to four years more before expiring. Tenancy agreements are typically signed on a five-year basis, according to Mr Ong.

On whether the group has had expansion plans in the territory curtailed due to the protests, Mr Ong said: "At this moment, we have no plans to expand in Hong Kong, but are still monitoring the market. If there are opportunities, we will act on them."

The group remains cautiously optimistic that 2020 will bring about better sales prospects, with the upcoming Chinese New Year to spur sales. In the meantime, the group is looking to operations in Thailand and Taiwan - which are seeing better sales figures - to hit its 2022 target profit margin of 8 per cent.

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