BreadTalk plans to double number of mainland outlets

PUBLISHED : Wednesday, 26 September, 2012, 12:00am
UPDATED : Wednesday, 26 September, 2012, 3:33am

Singapore-listed bakery chain BreadTalk plans to double the number of mainland outlets in the next two years.

Founder and chairman George Quek said the company would have 550 outlets across the mainland by 2014, compared with about 300 now.

He admitted that a shortage of local talent and dearth of quality retail space were the main stumbling blocks for the expansion.

"We have the resolution and confidence in competing in this fast-growing market," Quek said. "The bakery business could grow on a fast track over the coming two decades, benefiting from the scale of the economy and people's increasing income."

He expects mainland revenue to grow at least 30 per cent a year.

Revenue from the mainland would account for more than 50 per cent of BreadTalk's total in three years, Quek said.

A new class of consumer is emerging on the mainland, described by McKinsey & Co as "new mainstream consumers" with annual household income above 106,000 yuan.

The global management consultancy estimates there are now 43 million such households.

They are becoming more self-indulgent and loyal to certain brands, creating tremendous opportunities for foreign brands such as BreadTalk.

"There is competition for good locations and talented employees," Quek said. "But we want to make our brand synonymous with food safety and tasty bread in this mammoth market."

BreadTalk aims to open 200 outlets in Shanghai alone, up from 40 now.

BreadTalk, which has a presence in 40 cities on the mainland, is competing against a clutch of overseas brands such as Taiwan's 85 Degree Bakery Café.

"Location is the key to the success of an outlet," Quek said. "Despite the challenges, I believe our China businesses will outgrow any other market worldwide."

About 85 per cent of BreadTalk's mainland outlets are profitable and Quek expects the percentage could rise to 90 per cent by the end of next year as the company fine-tunes marketing and management.

"Capturing the rising generation of consumers will require ensuring products are relevant to consumers' needs and wants," said Max Magni, a partner and head of McKinsey's consumer practice in China.