3 Great Companies I Found on Scuttlebutt While I Was in Thailand: BreadTalk

This article is Part 3 of the three-part series — 3 Great Companies I Found on Scuttlebutt While I was in Thailand. You can read Part 1 and Part 2 here.

An article by The Fifth Person on BreadTalk’s AGM previously mentioned that Thailand will be BreadTalk’s third key growth market of growth, after Singapore and China.

It took nine years to open 19 BreadTalk bakeries and Toast Box outlets in Thailand. With its joint venture with Minor Group, BreadTalk’s expects to open 60-100 new outlets in the next ten years in Thailand from 2015 onwards. As an investor, we are always eager to match what management says with what they do, and to observe whether they execute their plans like they say.

So here are…

3 Quick Thinks I Learned on Scuttlebutt About BreadTalk:

#1 BreadTalk is competitively priced.

3 Great Companies I Found on Scuttlebutt While I Was in Thailand - BreadTalk (1)

According to locals, BreadTalk is attractively priced. Some of its bread products have lower price points while some have higher price points to cater to customers of different tastes and segments.

#2 BreadTalk’s Thai operations run similar to Singapore’s.

3 Great Companies I Found on Scuttlebutt While I Was in Thailand - BreadTalk (2)

I noticed that BreadTalk bakeries at Platinum Mall and Siam Paragon are situated at good locations with high footfall — similar to how they pick locations in Singapore. I also noticed that BreadTalk’s Food Republic is situated on a high floor in Siam Centre and takes up a significant section of the level. You can also observe this modus operandi in Singapore with Food Republics at VivoCity, Katong Mall, Wisma Atria, etc.

Because BreadTalk outlets occupy large sizable spaces in shopping malls, the company is able to command lower rents thereby reducing costs and improving margins.

BreadTalk located at the entrance of Platinum Mall.

BreadTalk located at the entrance of Platinum Mall.

#3 Food Republic is slightly higher-priced compared to other food atria.

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Despite the slightly higher prices, the crowd in Food Republic was still pretty decent – it was about 60% filled on a weekend evening. When I returned on a Monday evening however, the place was relatively quiet and students were seen occupying seats doing their schoolwork. I observed that the students mainly didn’t patronize the food stalls while there.

Food Republic at Siam Centre at 5:30PM Monday

Food Republic at Siam Centre at 5:30PM Monday

To conclude, this scuttlebutt was done when BreadTalk and Minor Group’s collaboration is still in its infancy. While BreadTalk looks to be running a tight ship so far in Thailand, investors can be hopeful that the joint venture and BreadTalk’s continue expansion in the Land of Smiles is successful.

Wei Han is an equity analyst and investor since 2006. Having experienced the global financial crisis in 2008 and the Europe debt crisis in 2011, Wei Han believes that rather than predict rain, one should build arks instead. His investment philosophy involves investing in strong, resilient companies that will survive the tough times and "emerge from the ashes" as multi-bagger stocks. Wei Han also writes on his blog www.ByteSizedInvestments.com.

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