KUALA LUMPUR: Penetrating and expanding one’s business into a new market is not without its challenges, especially for players in the highly competitive and saturated food and beverage (F&B) industry.
However, mining player Borneo Oil Bhd, which is also in the F&B industry, is confident about making a name for itself in Peninsular Malaysia. The owner of Sarawak’s home-grown fast-food restaurant chain SugarBun, Borneo Oil envisions a bright future for its brand outside of Sabah and Sarawak.
“Customers used to perceive us as ‘just another fast-food brand’ as there were many other fast-food chains in the market. However, our strength lies in our unique product offerings and that sets us apart from our competitors,” executive director Raymond Teo (pic) told The Edge Financial Daily in an email interview.
At present, there are 89 SugarBun outlets worldwide. Of that, two are in the Klang Valley, eight in Brunei, one in Bangladesh and one in Melbourne, Australia. The brand, established in Sarawak since 1979, is also firmly lodged in Kuching. Borneo Oil is also the master licensee for Singaporean pizza brand Pezzo in Sabah and Sarawak and Kalimantan, and master franchisee for the Brunei market.
Teo said it took the group awhile to make the plunge into Peninsular Malaysia as moving beyond its current market called for a “repositioning of the brand”. Making such a move required calculated risk management planning.
“There were three major factors. One, we had to ensure our products were unique and could appeal to a whole new market. Two, we needed empowered and motivated franchisees who have the same vision as ours. Three, getting the right locations at feasible costs was cardinal,” Teo said.
SugarBun has established itself with its signature “Borneo Asian Food” menu, which features authentic signature dishes most often found in Sarawak, including broasted (a cooking method combining boiling and roasting) chicken, Sarawak laksa, farmed tilapia and Borneo mackerel.
“We have devised a two-pronged plan to enter major and moderate markets in Peninsular Malaysia. Entries will be spearheaded firstly by setting up flagship stores and later, via the clustering of franchise outlets,” Teo revealed.
Borneo Oil will formulate franchise packages costing about RM250,000 targeted at up-and-coming entrepreneurs. The cost of setting up one outlet is between RM800,000 and RM900,000, said Teo.
Plans are afoot to set up five more SugarBun outlets in the Klang Valley and one more in Adelaide, Australia, by mid-2017. It also aims to make its maiden entry into Indonesia by then.
“As for Indonesia, we plan to introduce the brand into West Kalimantan. Its location at the border of Indonesia and Sarawak makes it a strategic pit stop for those travelling to Sarawak,” Teo said.
He said West Kalimantan will be the group’s “test bed” before it considers extending its footprint further to Jakarta. In line with its plans to have more outlets in Penisular Malaysia, Borneo Oil also plans to set up a central food-processing centre here. However, the group has yet to identify a location for the facility.
The group has set aside RM5 million for its F&B expansion plan.
Based on its Annual Report 2016, Borneo Oil saw its revenue for the financial year ended Jan 31, 2016 (FY16) rise 204% to RM256.12 million from RM84.25 million. Year-on-year, its fast-food and franchise operations posted a near 37% rise in top line.
More recently, Borneo Oil achieved a 51% rise in net profit in its second quarter ended July 31, 2016 (2QFY17) to RM4.35 million from RM2.89 million a year ago, as revenue climbed near 20 times to RM1.05 billion from RM51.18 million. While the steep revenue jump was mostly due to its oft-talked about gold mining investment and operations, top-line contribution from its fast-food and franchise operations was also up about 20% at RM13.66 million from RM11.38 million.
Going forward, the presence of many other established foreign fast-food brands has pushed competition in the industry to cut-throat levels, but Borneo Oil is unfazed as it is confident it has a unique selling proposition.
“What we are offering is a taste of Borneo. We are expanding our presence in Peninsular Malaysia to introduce to people our authentic, signature Borneo dishes. We are confident we will rise above other fast-food brands,” he said.
And if there is a turn of taste for healthier choices? “The millennials are a very health-conscious market. As and when they become a force to be reckoned with, our products will have to be geared towards the latest trends,” Teo added.