Business

Tuesday August 21, 2012

SugarBun set for faster expansion

By JACK WONG
jackwong@thestar.com.my


KUCHING: Borneo Oil Bhd-owned fast food chain SugarBun, which has opened 19 new franchise restaurants since last year, is poised for faster expansion in Malaysia with the award of area franchise licences for Sabah and Johor.

The Sabah area franchise licence was given to Johtamas Holdings Sdn Bhd while Goldfire Medic Sdn Bhd took the franchise licence for Johor.

SB Franchise Management Sdn Bhd executive director Raymond Teo said that under a five-year contract, Johtamas and Goldfire Medic were required to set up at least three restaurants each in the first year and a minimium of five outlets each between the second and fifth year of operations.

“They each have to set up a minimium of 23 outlets in five years.

“Their contracts are renewable for 10 years,” he told StarBiz.

SB Franchise is Borneo Oil's wholly-owned subsidiary.

Teo said Johtamas was the most established SugarBun franchisee, which currently operated a chain of 12 restaurants in Sarawak's major towns. Its restautrant in The Spring shopping mall here covers 3,000sq ft and is the biggest among all SugarBun outlets.

He said SB Franchise was making efforts to rebuild its fast food business in Sabah where SugarBun was once a popular brand in the 1990s.

All the Sabah restaurants were then owned and operated by SugarBun Services Corp Bhd (later renamed Borneo Oil). In 2008, the company sold all the SugarBun outlets in Malaysia as its business was hit by operational problems. It changed the business model and ventured into franchising.

“At the peak, Sabah SugarBun business contributed about 30% to group revenue,” said Teo. There are now two SugarBun franchise outlets in Sabah.

He said Johorean-owned Goldfire Medic operated a franchise SugarBun restaurant at the MJC new township here. It will open its second outlet in Lundu, known for its scenic beaches, near here in the next few weeks.

The first SugarBun restaurant in Johor is scheduled to open its door in Batu Pahat in October, and the second outlet in Benut before year-end.

“We see Johor as a more exciting location to create brand awareness and as a springboard for SugarBun to spread its networks in Peninsular Malaysia, and possibily to penetrate neighbouring Singapore market.

“There is tremendous growth potential in the peninsula.

“The flagship restaurant in Johor will cover 2,500 sq ft,” added Teo.

He said talks were underway with two Sarawakian investors to set up SugarBun outlets in Selangor and Federal Terrority, Kuala Lumpur.

One of them now operates four SugarBun restaurtants in Sarawak.

He said with another 11 new outlets to commence business in the next few months, SugarBun would have a network of 61 restaurants by December 2012.

The existing 50 restaurants are in Sarawak(40), Sabah (2), Brunei (5), China (2) and Bangladesh (1).

By next year,Teo is confident that the number of SugarBun restaurants would hit the 100-mark.

Teo said SugarBun outlets' total sales rose 28.6% to RM54mil last year from RM42mil in 2010.

The projected sales for 2012 is RM72mil.

“The Sarawak market is saturated.SugarBun is now focusing on the Peninsular Malaysia market.”

On overseas expansion, he said SugarBun's two newly opened restaurants in China were in Yingkou and Shanhai Square, a tourist resort, both in Liaoning Province.

“SugarBun (Yingkou) Ptd Ltd targets to open four more restaurants by the end of this year,” he added.

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