Food Junction

[AlphaQuant]

i was rather curious abt this fella, after noticing that the CFO resigned. it is rather interesting.

i actually quite like FJ - decent number of outlets, the revenue is stable (so number of people eating*margin per person is stable or increasing - makes sense since u have to eat if u are in a mall + as population increases, you get more people going to malls and there's only one foodcourt per mall hence no competition. It doesn't make sense to travel further to eat at a hawker center (which is not that much cheaper nowadays anyway than food court).

the issue is cost. labor has gone up, and rental has gone up, hence the erosion of margins.

so the question is: can management solve this issue?
labor is unlikely to go lower since all the labor is already from china - unless u can find cheaper people than them.
rental is not coming off.

i think the inevitable thing to happen is for prices to go up - which is bad for me unfortunately. however if they really drive up the prices (so from $4 to $5 hence 25% increase), i will still eat at the food court since i dun have a choice. (unless u want to take a bus/mrt/walk to eat something at a hawker center - which is not that much cheaper anyway.

the cash position of the company is still very healthy - so it should be able to hang tough for a while and slowly adjusts prices (it should be an industry wide thing anyway) - and the margins should come back slowly.

unfortunately current price levels look expensive to me on a PB/dividend yield/return on EV perspective - so waiting for better entry level.

[camelking]

i was rather curious abt this fella, after noticing that the CFO resigned. it is rather interesting.

i actually quite like FJ - decent number of outlets, the revenue is stable (so number of people eating*margin per person is stable or increasing - makes sense since u have to eat if u are in a mall + as population increases, you get more people going to malls and there's only one foodcourt per mall hence no competition. It doesn't make sense to travel further to eat at a hawker center (which is not that much cheaper nowadays anyway than food court).

the issue is cost. labor has gone up, and rental has gone up, hence the erosion of margins.

so the question is: can management solve this issue?
labor is unlikely to go lower since all the labor is already from china - unless u can find cheaper people than them.
rental is not coming off.

i think the inevitable thing to happen is for prices to go up - which is bad for me unfortunately. however if they really drive up the prices (so from $4 to $5 hence 25% increase), i will still eat at the food court since i dun have a choice. (unless u want to take a bus/mrt/walk to eat something at a hawker center - which is not that much cheaper anyway.

the cash position of the company is still very healthy - so it should be able to hang tough for a while and slowly adjusts prices (it should be an industry wide thing anyway) - and the margins should come back slowly.

unfortunately current price levels look expensive to me on a PB/dividend yield/return on EV perspective - so waiting for better entry level.

When the price goes from $4 to $5, some customers will switch from food court to fast food such as Macdonald. The thing is, unlike Macdonald, any food court operator will do for the Mall owners/management. So, the rental will continue to go up for food court operators. Hence, the profit margin will always be thin.

Food court/coffeeshop business, in my opinion, is more of a property play IF the business owns the properties. Don't think Food Junction owns any of the properties it operates in.

[valuehunter]

i was rather curious abt this fella, after noticing that the CFO resigned. it is rather interesting.

i actually quite like FJ - decent number of outlets, the revenue is stable (so number of people eating*margin per person is stable or increasing - makes sense since u have to eat if u are in a mall + as population increases, you get more people going to malls and there's only one foodcourt per mall hence no competition. It doesn't make sense to travel further to eat at a hawker center (which is not that much cheaper nowadays anyway than food court).

the issue is cost. labor has gone up, and rental has gone up, hence the erosion of margins.

so the question is: can management solve this issue?
labor is unlikely to go lower since all the labor is already from china - unless u can find cheaper people than them.
rental is not coming off.

i think the inevitable thing to happen is for prices to go up - which is bad for me unfortunately. however if they really drive up the prices (so from $4 to $5 hence 25% increase), i will still eat at the food court since i dun have a choice. (unless u want to take a bus/mrt/walk to eat something at a hawker center - which is not that much cheaper anyway.

the cash position of the company is still very healthy - so it should be able to hang tough for a while and slowly adjusts prices (it should be an industry wide thing anyway) - and the margins should come back slowly.

unfortunately current price levels look expensive to me on a PB/dividend yield/return on EV perspective - so waiting for better entry level.

When the price goes from $4 to $5, some customers will switch from food court to fast food such as Macdonald. The thing is, unlike Macdonald, any food court operator will do for the Mall owners/management. So, the rental will continue to go up for food court operators. Hence, the profit margin will always be thin.

Food court/coffeeshop business, in my opinion, is more of a property play IF the
business owns the properties. Don't think Food Junction owns any of the properties it operates in.

As I understand, Mcdonalds owns much of the land its restaurants sit on (perhaps not in singapore, yet to verify). As such, franchisees not only pay for licence among others, but also pay for rental to Mcdonalds. So to this extent, Mcdonalds does resemble a real estate play, just not purely one. 2 cents worth.

[AlphaQuant]

anyway, my whole point is that when i look at the food court industry,
i don;t think they can solve the issue of rising costs (i.e. labor+rent),

the only solution is to raise prices but it is going to be interesting at what point consumers change from accepting grudgingly to outright rejection.

i treat this as an interesting case study.

[CityFarmer]

anyway, my whole point is that when i look at the food court industry,
i don;t think they can solve the issue of rising costs (i.e. labor+rent),

the only solution is to raise prices but it is going to be interesting at what point consumers change from accepting grudgingly to outright rejection.

i treat this as an interesting case study.

Food court dining seem already a lifestyle, unless the raised price is too much to accept, diner still will go to food court in mall

I noticed that the meal price in food court has been raising from typical $3-4 to $4-6 recently, especially those just post-renovation.

[KopiKat]

anyway, my whole point is that when i look at the food court industry,
i don;t think they can solve the issue of rising costs (i.e. labor+rent),

the only solution is to raise prices but it is going to be interesting at what point consumers change from accepting grudgingly to outright rejection.

i treat this as an interesting case study.

Food court dining seem already a lifestyle, unless the raised price is too much to accept, diner still will go to food court in mall

I noticed that the meal price in food court has been raising from typical $3-4 to $4-6 recently, especially those just post-renovation.

In most cases, it may not be a Lifestyle choice, but rather, there're limited alternatives for those who wants to dine out, at a more affordable price.

Town planning has changed a lot since my younger days. In the past, we have for example Toa Payoh or Ang Mo Kio, where the Town Centre is where we have all the Shops, Hawker Centres, Coffee Shops, Cinema, Library, Interchange,... SO many choices...

Now, a Town Centre is typically a suburban Mall, which is next to the Bus Interchange + MRT station. The Library, Cinema, Shops, Eating Places,... are now all within the mall. It's aircon, so we pay the higher prices. Even Toa Payoh, AMK, Clementi got reinvented and took on the newer concept of a Town Centre (becomes a Hub). At least, they still kept the Hawker Centres and numerous Coffee Shops.

Many of the newer (even as old as 10yrs+) Town Centres has a lack of other cheaper alternatives when it comes to dining out. No Hawker centres, limited numbers of Coffee Shops,..etc.

Let's see if the decision to build 7 Hawker Centres will have a future impact. Unfortunately, not in my area...

[Ben]

I always avoid food court if I can. It is not just the price that turn me off, but rather the standard of the food. Many of the stalls in food court are now run or operate by FT, and many stalls are owned by chains. The standard of their cooking is at most average to me. Sian....I just feel that the skills of dishing out tasty food is fast disappearing. Today, you can still find good foods in some hawer centres and some coffee shops, but once these owners or chefs hung up their apron, we are going to miss some really authentic Singapore foods.

Sorry for being off topics...

[pianist]

SINGAPORE – 11 September 2012 – Mainboard-listed lifestyle food service company Food
Junction Holdings Limited (“Food Junction” or “the Group”) today announced the opening
of its latest restaurant − The Boxing Crab located adjacent to Sentosa’s Underwater World
Singapore.

[dydx]

3Q result just out.....
http://info.sgx.com/webcoranncatth.nsf/V...000463465/$file/121108-FJH-Results_Announcement_3Q2012.pdf?openelement

Notwithstanding the $5.436m accounting net loss, including having taken a $5.0m non-cash impairment charge on goodwill relating to the unsatisfactory Malones operation in Shanghai, as well as having to absorb the start-up expenses/losses of the new restaurants opened in this FY12, FJ's overall group business operations continued to generate positive FCF to the tune of $760k in 1Q.

[pianist]

I tot they already disposed the malones outlet sometime ago? how come there is still Impairment loss on intangible assets arising from the prior years acquisition of Malones Holdings Pte. Ltd. ("Malones"). ?