F&B firm offers to buy Jurong West coffee shop for $31m: Report

Coffee United at Block 496 Jurong West Street 41 is located near a community club, schools and other shops, and has healthy footfall, particularly at night, according to a Shin Min report.
Dated: 21-Jan-2020
K2 F&B Holdings, which operates a string of coffee shops and food stalls islandwide, has made an offer of $31 million for a coffee shop in Jurong West, Chinese-language evening paper Shin Min Daily News reported yesterday.

If the reported offer is accepted, the amount would be one of the highest paid for a coffee shop in a Housing Board estate, with the last high-profile sale being in 2015 when a coffee shop in Bukit Batok was sold for a similar amount.

K2 F&B chairman and chief executive Winston Chu would neither confirm nor deny the offer when asked to comment on the report.

He said it was too early to begin talking about any deal on Coffee United, as the coffee shop at Block 496 Jurong West Street 41 is known, adding that there would be other interested buyers if its owners were willing to sell.

Mr Chu estimated that at least nine more months were needed to finalise a deal, if it went through at all.

K2 operates 14 coffee shops - some under the Fu Chan brand - and more than 40 food stalls islandwide, The Straits Times reported last year. The firm has about 400 employees and an annual revenue of about $45 million.

Major players in the coffee shop industry include Kopitiam Group, Chang Cheng Group, Kim San Leng and Kimly Group. There are about 1, 200 coffee shops in Singapore.

The Shin Min report said Coffee United has 13 stalls, and stallholders were quoted as saying that their rental contracts would end in July. They said Coffee United's owners would usually renew the contracts a week or two before their expiry.

The report also said Coffee United is located near a community club, schools and other shops, and that the coffee shop has healthy footfall, particularly at night.

When asked about the draw of coffee shops as an investment, Associate Professor Lawrence Loh of the National University of Singapore Business School noted that those in the neighbourhood remained a key feature of the food and beverage sector here.

Coffee shops capture customers localised in dense housing estates, added Prof Loh, who is director of the Centre for Governance, Institutions and Organisations.

"The clientele tend to be older folk who are regular visitors of these coffee shops, "he said.

"While there is nothing special about Jurong West in particular, there are still regular flows of patrons to the coffee shops there due to convenience and cost considerations."

Source: Straits Times