RIL Properties PLC is progressing with negotiations with a potential investor to dispose of its entire stake in FoodBuzz (Private) Limited which owns franchise rights of BreadTalk in Sri Lanka.
The potential investor has expressed to 100 percent stake held by RIL in FoodBuzz. The Company plans to recover the carrying value of FoodBuzz through the sale. As of 31st March 2021, FoodBuzz was valued at Rs. 437.54 million. However, the company had Rs.19.4 million worth of loans in liabilities.
RIL Properties decided to discontinue operations of FoodBuzz in March, temporarily shutting down all Breadtalk outlets in the country.
In the FY ended on 31st March 2021, FoodBuzz’s revenue plummeted to Rs.170 million from Rs.413 million in the previous FY and the company ended the year in the deep-red territory with losses sky-rocketing to Rs.190 milllion due to discontinued operations in the last quarter of the year.
The Singapore-based boutique bakery, Breadtalk opened its first outlet in Sri Lanka through its local franchisee, Foodbuzz in 2012.
With 7 outlets, RIL Properties announced in 2017 plans to expand the number of stores in the country to 16 by 2021 with an investment of over Rs. 500 million.
However, the expansion drive came to a grinding halt as the country’s economy went through multiple shocks. Especially, RIL Properties said that Easter attacks and the ongoing pandemic caused a major downfall in their operations. As a result, RIL Properties was only able to add three BreadTalk outlets in the period.
Combined with rising inflation, pandemic-related travel restrictions, the decline in incomes, Sri Lankan consumers have been cutting non-essential expenditure. In 2020, Sri Lankans spent 34.2% less on Restaurants and Hotels compared to the previous year. Many analysts are expecting this trend to continue into this year. Some research institutes predicted Sri Lankans income levels are likely to take another two years to bounce back to pre-covid levels. However, they have warned that rising inflation further worsens income inequality in the country, leading to a so-called K-shape recovery.
Yaseen family owns the majority of shares of RIL Properties PLC. Some key business verticals of RIL Properties such as real-estate and automobile were also impacted by the pandemic.