Berjaya Food Bhd. Posts Quarterly Loss as Middle East Conflict Impacts Sales

Berjaya Food Bhd., the operator of the Starbucks coffee chain in Malaysia, has reported a major net loss in its fourth quarter amid declining consumer sentiment related to the ongoing conflict in the Middle East, Bloomberg reports.

The company, part of the wider Berjaya Corporation Bhd. conglomerate, posted a net loss of 38.2 million ringgit (some $8.8 million) for the quarter ending in June, a stark contrast to a profit of 17.28 million ringgit recorded during the same period last year.

In a financial report released on Tuesday, Berjaya Food cited a drastic decline in sales, which fell by more than half, as a primary factor contributing to their poor performance.

“The significantly lower revenue and pre-tax loss incurred in the current quarter under review were mainly due to the current sentiment in relation to the conflict in the Middle East,” the company said.

The broader fast-food industry, particularly American brands, has faced mounting challenges in regions including Asia, the Middle East, and parts of Europe due to calls for boycotts linked to their perceived associations with Israel. Notable examples include McDonald’s, which became a target of boycotts following social media posts showing its Israeli branches providing meals to soldiers after the Hamas attack on October 7.

For the full fiscal year ending in June, Berjaya Food reported a total net loss of 91.5 million ringgit, along with a 35% drop in revenue. The company attributed this underperformance not only to the effects of the Middle East conflict but also to a one-off loss incurred from the sale of its entire equity interest in Jollibean Foods Pte Ltd. last November.

As of June 2023, Berjaya operated 393 Starbucks locations across Malaysia and also runs restaurants under the Kenny Rogers Roasters brand, along with cafes under the Paris Baguette label.

In response to the disappointing financial results, Berjaya Food’s shares fell by 13% on Wednesday, reaching their lowest level since February 2022.