KUB aims to turn food business into major earner within 3 years

CONGLOMERATE KUB Malaysia Bhd (6874) hopes to increase contribution from its food-related business from less than 10 per cent now and turn it into a major earner to the group's bottom line within three years.

It is capitalising on the steady demand from local consumers for fast food services as well as opportunities in a vast global market for halal food in order to cushion the volatility in commodities, particularly palm oil.

KUB group managing director Datuk Mohd Nazar Samad said its fast-food chain A&W (Malaysia) Sdn Bhd, which is undergoing a facelift to capture a wider market, is expected to break even on its investment soon, backed by aggressive expansion and opening of new outlets.

It now has 39 outlets throughout the country with the bulk of them located in the Klang Valley, but there are plans to open new outlets in Sabah and Sarawak next year.
"We are currently negotiating with related parties for openings in Sabah and Sarawak, which we intend to do simultaneously in both states to avoid unnecessary financial outflow," he told reporters after launching the new look of A&W Batu Road outlet and the A&W mobile fast-food truck in Kuala Lumpur yesterday.

The event was officiated by Federal Territories and Urban Well-being Minister Senator Datuk Raja Nong Chik Raja Zainal Abidin.

KUB bought A&W from its previous franchise holder, TDM Bhd, in 2002. The fast-food chain is aiming for a single-digit net profit in 2010 and a total of 100 outlets by 2015.

Mohd Nazar said the group is spending RM39 million to refurbish all its existing A&W outlets, with RM1 million allocated for each outlet.

"We expect the refurbishment exercise to be completed within this year. Of the 39 A&W outlets, only six left to be done," he said.

The refurbishment includes outlook expansion, more food and beverage offerings and the installation of modern utensils.

Mohd Nazar also said A&W will have three trucks operating by year-end. It plans to have a fleet of 10 trucks under its expansion drive.

"Our mobile A&W trucks will drive to hotspots around Peninsular Malaysia and focus in areas without A&W's presence," he added.

KUB, which was in the red from 1999, returned to profitability in 2008.

The bulk of its revenue comes from its property, engineering and construction divisions, followed by information and communications technology and food and beverage segments.

It hopes to remain in the black as the group continues to strengthen its core businesses and add value.