Report: Firm makes $31m offer for Jurong West coffee shop
If K2 F&B's offer is accepted, it would be one of highest paid
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 newspaper 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 chairman and chief executive Winston Chu would neither confirm nor deny the offer when asked to comment.
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 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. It has about 400 employees and an annual revenue of about $45 million.
The coffee shop industry in Singapore is dominated by four big players - Kopitiam Group, Chang Cheng Group, Kim San Leng and Kimly Group. There are about 1,200 coffee shops in Singapore.
In 2018, coffee shop chain Broadway bought out its rival S11's 23 outlets for $200 million - the largest purchase of its kind for a coffee shop chain.
In 2015, Yong Xing Coffee Shop at Block 155 Bukit Batok Street 11 was sold to EH155 for $31 million.
Two years before that, Coffee Express 2000 at Block 682 Hougang Avenue 4 was sold to Broadway for $23.8 million.
The Shin Min report said Coffee United has 13 stalls, and stallholders were quoted as saying their rental contracts would end in July this year.
They said Coffee United's owners would usually renew the contracts a week or two before their expiry.
The report said Coffee United is located near a community club, schools and other shops and has healthy footfall, particularly at night.
When asked about the draw of coffee shops as an investment, Associate Professor Lawrence Loh at National University of Singapore Business School said that those in the neighbourhood remain a key feature of the food and beverage sector here.
Coffee shops capture customers localised in dense housing estates, added Prof Loh.
"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," he said.