3 aggressive expansion moves of ThaiBev's Oishi

It eyes getting to 203 by end-2013.

According to CIMB, the restaurant expansion strategy is to 1) accelerate stores growth, 2) extend the product offering to target the masses, and 3) increase margins through higher-value offerings.

2012 was the year of the fastest store expansion for Oishi with 39 stores opened.

Oishi has 155 outlets now and aims to have 203 by end-2013.

Here's more from CIMB:

Restaurant expansion will come from: 1) Kakashi, its quick-service restaurant format, which will jostle with the likes of McDonalds and KFC; and 2) Shabushi, which is its high-end shabu shabu offering.

Oishi sees substantial room for Kakashi to compete with McDonalds, KFC and the local operator, MK Suki. Kakashi ran only five restaurants at end-FY12 vs. 500 for KFC Thailand.

But because of its expansion, fixed and pre-operating expense may drag down its ROEs in the near term.

Expansion of Shabushi restaurants is important as these restaurants can lift Oishi's overall food margins.

Higher overall margins make it easier to attract franchisees.

Franchising minimises the risk of a local-knowledge gap in overseas expansion, and paves the way for beverages to follow.

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