KFC franchisee QSR Brands says 'diligently' adapting to food disruption, mitigating impacts

TheEdge Tue, Jun 21, 2022 06:06pm - 1 year View Original


KUALA LUMPUR (June 21): QSR Brands (M) Holdings Bhd, the KFC and Pizza Hut restaurants franchisee in Malaysia, said the company is "diligently" working to adapt to food industry disruption-driven changes, and mitigating their impacts on QSR's businesses and customers to ensure these impacts are minimised.

As a brand under the essential service sector, QSR said the company, which also undertakes poultry farming and processing, is like many other Malaysia-based businesses which are susceptible to external factors and government regulations.

"We welcome the government’s efforts and initiatives to improve and stabilise some of the disruptions faced by the industry and to increase food supply, consequently giving organisations more options to spur the supply in the country and enabling robust commercial offerings.

"We are working closely with all parties to ensure the impacts to our business and customers are minimised.

"The (QSR) teams are diligently working to adapt to these changes and mitigate the impacts. Over the years even before the (Covid-19) pandemic, QSR has shown resiliency to overcome many external forces, and we believe this is another challenge that we will prevail over. We believe over time, this trend will normalise and foresee a positive outlook for QSR as a whole," QSR said in a statement in response to enquiries by theedgemarkets.com.

QSR was responding to queries on the outlook of the company's chicken farming operations, in light of factors including higher commodity prices and a weaker ringgit against the US dollar.

Prices of commodities like corn and soybean, which are key ingredients for chicken feed, have risen partly due to the Russia-Ukraine war-driven supply disruption.

According to Markets Insider's website, corn prices have risen to about US$8 a bushel in June 2022 from around US$6 in November 2021, while soybean prices have climbed to about US$17 a bushel in June 2022 from around US$12 in November 2021.

In currency markets, the ringgit weakened past 4.4 for the first time since the onset of the Covid-19 pandemic in March 2020 on May 19, 2022 against a strengthening US dollar, in anticipation of US interest rate hikes to fight inflation.

As weaker ringgit against the US dollar means Malaysia's US dollar-denominated imports will be more expensive, although a depreciation in the ringgit's value is perceived to be beneficial to Malaysian exporters due to more competitive pricing for local products in global markets.

QSR's KFC and Pizza Hut franchise operations extend beyond Malaysia.

According to QSR's website, the company operates over 850 KFC restaurants across Malaysia, Singapore, Brunei and Cambodia, besides over 500 Pizza Hut restaurants across Malaysia and Singapore.

QSR said Malaysia ranks as the country with one of the largest KFC and Pizza Hut store counts among Yum! Brands’ Global Franchise Network.

"KFC forms the largest part of our (QSR) business and the key driver of our growth," QSR said.

To support QSR's core business, QSR said it operates several complementary businesses based on the "farm to fork” model, which ensures a steady supply of Halal-compliant and high-quality ingredients.

"These operation lines form a vertically-integrated business ecosystem from farming to primary processing, to secondary processing, before reaching our wholesale and restaurant operations," said QSR, which is also the manufacturer of the "Life"-branded sauces and distributor of frozen chicken-based products under the “AYAMAS” brand.

Johor state investment arm Johor Corporation (JCorp) owns QSR.

According to JCorp’s website, JCorp operates in four core sectors, namely agribusiness, wellness, food and restaurant, besides real estate and infrastructure, through JCorp's flagship companies Kulim (M) Bhd, KPJ Healthcare Bhd, QSR and Johor Land Bhd respectively.

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