New store format may drive Gourmet Master’s growth

By Kevin Chen  /  Staff reporter

Sat, May 18, 2013 - Page 14

Gourmet Master Co (美食達人), the operator of cafe and bakery chain 85°C (85度C), could see a moderate improvement in business this quarter after getting off to a good start last quarter, Fubon Securities Co (富邦證券) said yesterday.

While the company promises to be more aggressive in the second half of the year by opening more stores and new format outlets, “the market remains challenging and we will continue to monitor the impact of new initiatives,” Fubon analyst Chloe Wu (吳家瑋) said in a note.

Wu’s comments yesterday came after Gourmet Master held an analyst meeting on Thursday to review its first-quarter results released on Tuesday and provide guidance on its outlook in the coming months.

In the January-to-March period, Gourmet Master’s net profit was NT$185 million (US$6.15 million), or NT$1.31 per share, up from NT$166 million, or NT$1.18 per share, in the previous three months. However, the figure was down from NT$323 million, or NT$2.29 a share, in the same period last year, the company said in a stock exchange filing on Tuesday.


Gross margin improved to 56.1 percent from 54.9 percent the previous quarter and 56 percent the same period last year, which analysts attributed to improved utilization rates at Gourmet Master’s central kitchens and a better product mix.

Operating margin reached 8.2 percent last quarter, which was better than the previous quarter’s 7.4 percent, but still a steep decline from 14.1 percent in first quarter last year because of higher tax expenses.

Revenue expanded 1.4 percent quarter-on-quarter and 9.2 percent year-on-year to NT$3.59 billion last quarter, Tuesday’s filing showed.

From January through last month, accumulated revenue totaled NT$4.83 billion, up 11 percent from a year ago, the company said in a separate filing last week.

“We see the slight improvement in same-store sales growth in April as a positive sign,” Wu said in the note. “The market is now expecting the company to continue delivering moderate improvement in the second quarter.”

In Thursday’s meeting, Gourmet Master said it was planning to introduce new format stores — which will have a larger area for beverages as these products generate higher margins — first in China next quarter and then in Taiwan in the final quarter.

To enhance operational efficiency, the company will accelerate its expansion in China and the US, as well as introduce a franchise model in Taiwan and China by selecting some store managers to become franchisees in the second half of the year, according to Wu’s note.


In addition, the company plans to open 20 new stores this quarter and 40 to 60 in the second half, after opening only two last quarter.

It currently has 382 stores, including 342 in Taiwan, the note showed.

HSBC Securities Taiwan Corp said it judged the worst was behind for Gourmet Master, and cautiously predicted a mild improvement.

“It would be more appropriate to open new stores in the right location with a new format,” HSBC analyst Abel Lee (李忠翰) said in a note on Thursday.

Shares of Gourmet Master, which will be added to the Taiwan Index of the MSCI Global Small Cap Indices after the market closes on May 31, rose 1.74 percent to NT$175 yesterday.