Goldilocks expects a boost from alliance with SM

Bakeshop chain Goldilocks Bakehop Inc., now in the thick of discussions on a buy-in deal with the country’s largest conglomerate SM Investments Corp., aims to establish an alliance that will strengthen its 579-store food retailing enterprise here and abroad.

“Goldilocks has always been open to forging strategic partnerships with companies who share our vision and values, while helping us become an even more formidable brand both here and abroad,” Goldilocks president Richard Yee said in a statement.

“Over the years, several groups (have expressed) interest and we have now narrowed down the list,” Yee added.

Yee said his company was not in a position yet to share the details of discussions with SM, noting, however that “the best strategic alliance is one that will make the brand stronger in its next 50 years.”

“Goldilocks will explore all means to respond effectively to the demands of an ever-growing consumer base and to new markets,” he said.

Of 51-year-old Goldilocks’ 579 store network, 559 are in the Philippines. Of the overseas stores, 12 are in the US, two in Canada and six in Thailand. Two-thirds of the store network are franchised.

“We assure everyone—our internal and external stakeholders, our employees, affiliates, business partners and most of all, our loyal customers—that Goldilocks will always be committed to the same standards of excellence that have made us the country’s number one bakeshop,” Yee said.

SM Investments’ potential entry as a strategic investor in Goldilocks awaits clearance from the Philippine Competition Commission, the country’s antitrust body which is mandated by the Philippine Competition Act to review mergers and acquisitions valued at P1 billion or above to ensure that these deals will not prejudice the interest of the consumers.

“Strategically, it makes sense for SM Retail because SM Prime has been trying to shift the tenant mix to lean toward food compared to nonfood. With a food-retail company like Goldilocks, the motives can either be to ensure an arguably anchor tenant remains part of the tenant portfolio and will participate in the growth of gross leasable area and/or be the launchpad for new investments in the food retail format,” said Jose Mari Lacson, head of research at ATR Asset Management.

However, Lacson said an investment in Goldilocks would make SM, as landlord, competitor to other fast-food tenants. “That could be an issue,” he said.

“Food manufacturing and franchising are also not in the core competence of the group so there would be a learning curve that would have to be faced,” Lacson said.

Based on the latest financial statement filed by Goldilocks, its net sales hit P7.86 billion in 2015 compared to P6.85 billion in the previous year. The fast-food chain had P2.89 billion in total assets as of 2015.

Looking at Goldilocks’ 2015 statements, Lacson said profit growth could be challenging with raw material volatility.