Berjaya Food Berhad is the franchisee for the Starbucks brand in Malaysia, Brunei, and, more recently, the Nordic countries (Denmark, Iceland, and Finland). It also holds the franchise rights for Kenny Rogers ROASTERS and Paris Baguette in Malaysia.
Since the start of the Israel-Hamas conflict, the company has faced an unprecedented boycott in Malaysia. Many Malaysians, expressing solidarity with Palestinians and protesting Israeli actions, have called for boycotts of prominent American brands, including Starbucks, as the U.S. is perceived as a strong ally of Israel. Despite Starbucks’ clarification that it does not support any political or religious cause, it has been affected by the backlash.
This boycott has significantly impacted Starbucks Malaysia, operated by Berjaya Food. Many consumers have avoided its outlets, resulting in a sharp decline in Berjaya Food’s share price, which has halved since October 2023, dropping from RM0.71 to RM0.35.
Here are seven things I learned from the 2024 Berjaya Food AGM.
1. Revenue declined 32.7% year-on-year to RM750.7 million in 2024. The management attributed the decline to external factors such as the Middle East conflict. In 2024, the company incurred a loss of RM90.9 million, a marked contrast to the net profit of RM103.4 million recorded in 2023. This decline was attributable to lower revenue, a one-off loss from the disposal of its entire stake in Jollibean Foods Pte Ltd, and impairment expenses on underperforming stores. Dividend per share dropped from 3.50 sen in 2023 to 0.44 sen (share dividend via distribution of treasury shares) in 2024.
Berjaya Food retains ownership of Joybean’s production and distribution in Malaysia. Joybean products are available at various retailers in the country, including Starbucks and Kenny Rogers ROASTERS.
2. The number of stores grew from 477 in 2023 to 483 in 2024. According to CEO Dato’ Sydney Lawrance Quays, around 60 Starbucks outlets were temporarily closed during the year, but no employees were laid off.In Malaysia, there was a net increase of 15 Starbucks stores, and additional Paris Baguette outlets were opened in both Malaysia and the Philippines. Following FY2024, the company divested its entire stakes in Ser Vegano Sdn Bhd, the operator of the Tex-Mex vegan restaurant SALA, and Berjaya Kelava Sdn Bhd, a vegan ice cream business. Additionally, there was a net closure of 10 Kenny Rogers ROASTERS stores during the year.
3. Many shareholders were concerned about the impact of the boycott on the company’s financial health. Quays reassured shareholders that the management has undertaken several measures to mitigate the impact including cost mitigation.
The company is expanding its operations into new businesses and international markets. In 2022, it introduced the Paris Baguette franchise to Malaysia and is now growing this bakery business in the Philippines, with plans to enter Thailand and Brunei next. Additionally, the company aims to open its first Starbucks store in the relatively untapped Nordic region by 2025. Establishing a Paris Baguette outlet in the Philippines involves an investment of approximately RM1.5 million, while setting up a Starbucks outlet in the Nordics is estimated to cost RM2 million. The typical gestation period for these new outlets is about one year.
4. Despite Starbucks being an American brand, Quays pointed out that Berjaya Food is fully Malaysian-owned and employs an all-Malaysian workforce. He added that some customers who initially boycotted the coffee chain due to miscommunication, misinterpretation, or misinformation have since returned.
Berjaya Food reported its lowest revenue in Q1 2025 compared to the previous four quarters, extending its streak of net losses to four consecutive quarters since Q2 2024. Starbucks Malaysia contributed to around 90.0% of Berjaya Food’s revenue in 2024 and 2023. Quays acknowledged that Starbucks will not expand as fast it used to be in Malaysia. Nevertheless, he expects 2025 to be a stronger year for the company than 2024.
5. Starbucks faces strong competition in the Malaysian coffee market. While Quays acknowledges that the competition is not considered direct, Starbucks continues to emphasize its role as a third place for consumers to gather, socialize, or relax.
Despite management’s claims that customers perceive Starbucks differently, I believe the experience it offers is similar to that of many other coffeehouse chains in Malaysia. Homegrown ZUS Coffee offers lower prices, with a hot Americano costing RM6.90 compared to Starbucks’ RM8.00—a difference of approximately 13.8%. This price difference, along with the availability of other popular local chains like Gigi Coffee and Kenangan Coffee, gives consumers a wide range of options.
The arrival of Luckin Coffee in Malaysia by 2025 is expected to further intensify competition. While Starbucks emphasizes its commitment to providing high-quality coffee, as stated by Quays, personal preferences vary.
6. Quays explained to a shareholder that Starbucks’ global reach allows it to mitigate the impact of coffee bean price fluctuations. The company purchases beans in bulk and secures long-term contracts with farmers, often at above-market prices, ensuring fair practices.
7. During the AGM, Berjaya Food highlighted several corporate social responsibility initiatives, including having three Starbucks Signing Stores in Malaysia that employ people with disabilities. This initiative reinforces the company’s connection to the community, particularly in the current climate. Quays stressed that Starbucks Malaysia supports humanitarian work and remains neutral in global conflicts.
The fifth perspective
In summary, FY2024 was a difficult year for Berjaya Food. The company is working to diversify and expand, but recovering from boycotts and facing strong competition is proving to be a tough challenge. While divesting non-core assets is a positive step, the company clearly has a long road ahead.
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