Korea’s bakery franchises target Southeast Asia for growth opportunities

South Korea’s two leading bakery franchise companies are expanding aggressively in Southeast Asia.

SPC Group, the operator of Korea’s largest bakery chain Paris Baguette, said on June 9 that it opened the first Paris Baguette store in Cambodia’s capital city Phnom Penh. Cambodia marks the group’s sixth overseas market entry, after China, the US, France, Vietnam and Singapore.

SPC Group operates more than 430 stores of Paris Baguette and Shake Shack in the six countries. The group in 2018 has obtained the rights to operate the American burger chain Shake Shack’s shops in Singapore and South Korea.

“The new store in Cambodia is a key milestone for our company’s expansion plans in Southeast Asia, one of the three growth pillars along with China and the US. We are planning to enter the Middle East as well,” said SPC Group.

SPC opened the store in partnership with Cambodia’s HSC Group, unlike those in other five countries where the group only operates stores in the forms of either direct ownership or franchises. SPC said that its future moves in the global market will consider various other options including joint ventures and master franchise agreements.

SPC took its first step in the global market by opening up a Paris Baguette store in China’s Shanghai in 2004.
 
The group also had a meeting in April with Mohamed Azmin bin Ali, Malaysia’s Senior Minister for Finance and Economics as well as Minister of International Trade and Industry, to discuss building a Halal-certified production plant in the country.

SPC said it is also reviewing a potential entry into the Indonesian market.

Premiumization and localization are SPC’s two strategic themes in the global market. The group primarily focuses on raising brand awareness among the wealthier group of consumers when it first enters a new market. It also said that the local-themed bread products make up more than 20% of the offerings in every country.

Tous Les Jours, the number two player among Korea’s bakery chains, is also closely chasing its competitor’s moves.

Its owner CJ Foodville Co. has opened up more than 280 Tous Les Jours stores in Cambodia, China, Indonesia, Mongolia, Vietnam and the US.

CJ Foodville’s first overseas Tous Les Jours outlet opened in the US in 2004. The CJ affiliate’s main strategy is focusing on profitability over expansion.

Analysts say such emphasis on profitability was the key success factor in CJ Foodville’s US business coming out of the red in 2018.

CJ Foodville’s US operation has posted a net profit for three consecutive years including 2020. 

Write to Sul-li Jun at sljun@hankyung.com
Daniel Cho edited this article.