Berjaya Food Reports Rising Losses: Starbucks Malaysia’s Struggles Amid Middle East Conflict

Berjaya Food, a Malaysia-based company, has recently reported a significant increase in losses and a decrease in sales for both their fourth quarter and the entire fiscal year. Berjaya Food, which operates Starbucks Coffee in Malaysia and Brunei, along with Kenny Rogers Roasters and Paris Baguette in Malaysia, experienced reduced sales due to a decrease in store numbers.

Quarterly Report

The revenue for the group, for the quarter ending on June 30, experienced a decrease of 11 per cent compared to the previous year, settling at RM115.8 million (US$27.4 million). This reduction is mainly attributable to the decrease in the number of store locations. However, the management has noted a slight increase in sales compared to the third quarter. This increment is primarily due to an improved sales performance from Starbucks Malaysia.

In this quarter, the loss before tax increased from RM42.6 million to RM183.7 million. The primary reason for this increase was the impairment of property, plant, and equipment (PPE) and right-of-use (ROU) assets linked to non-performing stores.

Annual Report

For the entire fiscal year, the revenue dropped by 36 per cent, amounting to RM476.7 million. This drop is linked to the ongoing sentiment surrounding the Middle East conflict, which has affected market dynamics and altered customers’ purchasing behaviours.

The pre-tax loss for the year broadened from RM89 million to RM288.7 million. This loss was due to the necessary impairment provision to PPE and ROU assets, resulting from the downsizing of Starbucks Malaysia’s operations.