Singapore Bakery Giant Adds Broth Business to Menu

(Beijing) — Singaporean food giant BreadTalk is set to launch a restaurant chain in China and Thailand featuring southern Chinese-style pork ribs in broth, as the group has seen their bakery businesses flop as restaurants thrive.

BreadTalk Group Ltd., the owner of bakery BreadTalk and food atrium Food Republic, has set up a joint venture with food maker Song Fa Holdings Pte. Ltd. to operate Song Fa’s well-known bak kut teh restaurants, which serve the highly popular bak kut teh — the fall-off-the-bone pork ribs immersed in a flavorful, spice-infused hot broth.

The chain will open in Shanghai during the fourth quarter of this year. Two more restaurants will land in Thailand in 2018, followed by three others in the Chinese cities of Beijing, Guangzhou and Shenzhen.

Although BreadTalk is a bakery giant that runs more than 800 outlets across Asia, it saw revenue generated by its bakery division decline 3% to $73.6 million in the first quarter, “primarily due to lower China franchise revenue contributions.”

In addition, the profit of the company’s restaurant businesses jumped 25% to $6 million in the first quarter, while the bakery division’s profit fell 11% to $1.7 million during the same period.

From 1999 and 2013, the bakery market in China experienced a fast-growing golden era with 18.6% average annual growth, according to consultancy Zhiyan. Since 2014, however, growth has slowed to around 11%.

Competition has grown fierce as many rival brands operating in China, such as Withwheat and 85°C, have become extremely popular.

And competition among bak kut teh restaurants is likely to heat up as well. A popular chain named Old Street Bak Kut Teh is to expand into China this year, Singapore newspaper Lianhe Zaobao reported.

On Wednesday, shares of Singapore-listed BreadTalk dropped 0.33% to 1.50 Singapore dollars ($1.08).

Contact reporter Coco Feng (renkefeng@caixin.com)