The Starbucks Malaysia franchisee has struggled to allay misperceptions about the US coffee chain’s stance on the Israel-Gaza conflict, with prolonged customer boycotts continuing to negatively impact sales and profitability
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Berjaya Food operates 408 licensed Starbucks outlets in Malaysia | Photo credit: Olena Bohovyk
Malaysia’s Berjaya Food has posted a fourth consecutive quarter of falling sales and widening losses as boycotts of western brands over the Israel-Gaza conflict continue to hinder its Starbucks franchise.
The Selangor-based restaurant group, which operates 408 licensed Starbucks outlets in Malaysia, posted a 52% year-on-year decline in fourth quarter sales to RM130.6m ($30m) – 6% less than the previous quarter.
Berjaya Food also reported a pre-tax loss of RM42.7m ($9.8m) in the three months ending 30 June 2024, compared to a RM29m ($6.6m) profit in the same period of 2023.
The group said ‘current sentiment related to the conflict in the Middle East’ was behind falling sales. Berjaya Food permanently closed three Starbucks outlets in Malaysia and suspended operations at 25 underperforming stores in the fourth quarter.
For the full 12-month period, Berjaya Food’s total sales fell 34% from RM1.1bn ($257.5m) in 2023 to RM730m ($168m). The business also recorded a pre-tax loss of RM87.3m ($20m) compared to a RM148.7m ($34.2m) profit during the previous year.
“Despite these difficulties, we remain cautiously optimistic and expect a gradual improvement in operational performance over the next financial year. While recovery may be slow due to ongoing current uncertainties, the directors believe that strategic adjustments and operational refinements will, in time, strengthen the group’s position and lead to better financial results,” Berjaya Food said in its Bursa Malaysia filing.
Berjaya Food commenced its licensed store partnership with Starbucks in December 1998 with an outlet in Kuala Lumpur. In August 2024, the restaurant group secured licensing rights to operate Starbucks stores in Denmark, Finland and Iceland – with the latter a new market entry for the US coffee giant.
Berjaya Food’s licensed café portfolio also includes South Korean bakery-café chain Paris Baguette. The restaurant group launched Paris Baguette in Malaysia in January 2023 before bringing the brand to the Philippines in April 2024. Berjaya plans to launch the chain in Brunei before the end of 2024.