KUALA LUMPUR (May 23): KUB Malaysia Bhd said it is still weighing an exit from its fast food business in A&W Malaysia, but stressed that it can only be done at the right price.
KUB president and managing director Datuk Abdul Rahim Mohd Zin said the group has received several offers to buy over the fast food franchise.
“We have obtained several proposals for our A&W business,” he told the press after KUB’s annual general meeting. “We are presently evaluating — it depends on the right price. If the right price comes, we are open to it.”
“My rationale is about capital rationing… we have to make a call on whether or not we can continue with this business or to invest more in the other sectors that provide better, quicker or larger financial returns for us,” he added.
KUB’s food business division contributed RM46.9 million or just under 10% of the group’s revenue for the year ended Dec 31, 2016 (FY16). In the first quarter of FY17, the food division contributed RM247,000 in net profit, up five-fold year-on-year.
Abdul Rahim, however, reaffirmed the group’s commitment on the three-year development agreement inked with its A&W franchiser, which concludes in June 2019.
“We have to comply with it (development agreement), we have to preserve the value of the asset by continuing to invest in new stores in compliance to the [franchise development] agreement,” said Abdul Rahim.
The group, he added, has allocated RM25 million to continue the expansion plan under the agreement — comprising eight new stores next year and nine more in 2019. KUB currently has 35 A&W outlets in Malaysia.
“It’s a very competitive business. We are still very neutral on this sector, because we invested a lot of money in this particular business,” said Abdul Rahim.
http://www.theedgemarkets.com/article/kub-mulls-aw-exit-%E2%80%94-if-price-right
