The Executive Talk: Mudman PCL (SET:MM)

BANGKOK, Oct 10, 2019 - (ACN Newswire) - Mudman PCL (SET:MM) 
Chief Executive Officer, Mr. Nadim Xavier Salhani discusses the company's strategy and
outlook in The Executive Talk (TET) by

TET: Please explain the history of MM.

MM has a very interesting background and the brands have gone through 3
different ownerships before settling with MM. I joined the organization in
2003 where Au Bon Pain was in the initial stages of expansion and Dunkin'
Donuts was a dying brand with the stores and the staff were looking poor but
thankfully the product was very good. We came up with several initiatives to
turn this around.

In the past Dunkin' Donuts used to be in 2,000 7-11 stores which was a
mistake for the brand as it was loss making due to the business structure and
in fact it should be focused on the core business which are its stores. So, we
cancelled this agreement, invested in upgrading the stores, the uniforms, the
systems and adjusting the ordering system to be more a buffet, self-service
which encourage consumers to purchase more items. These are just some of the
initiatives which drove Dunkin' to the profitability and scale that it is

But at the time it was not enough, and investment groups came in to
recapitalize the business which allowed for us to grow the Au Bon Pain
franchise to scale. In 2012 Sub Sri Thai became the major shareholder and they
are here to stay, the vision of our Chairman is that he loves the food
business, wants to grow it and to bring in more brands.

After six months we became the franchisee for Baskin Robins which was a risk
at the time because MM was the third franchisee in Baskin Robins lifetime in
Thailand and it was another turnaround situation where we had to close
non-performing stores, refresh the remaining stores, and focus only upon
specific locations to bring it to a positive cash flow.

MM then had three franchise brands and we decided that the best strategic
decision was to have our own inhouse brands either organically or through
acquisitions, and this led us to Greyhound. Here the vision was simple, MM won
the bid for Greyhound not because we bid the highest price, which we did not,
but because we understood that Greyhound as a brand has a built-in emotion
which is priceless, like Nike and Apple and that the brand extension potential
is incredibly vast. The founders are creative people, artists and I told them
that this is brand that should go global.

So, with Greyhound Cafe we expanded to Hong Kong, Singapore, Indonesia,
Malaysia, we have just signed Vietnam and Japan and are looking at Taiwan and
the Philippines. We understand Asia well and then decided to go to Europe,
specifically London which took us a couple of years with several challenges as
we had limited on the ground knowledge, but I think that next year our London
location will be doing very well.

After London an opportunity arose for us in Paris to acquire Le Grand Vefour.
This is a 2-star Michelin landmark in Paris, overlooking the gardens of the
Palais Royale, it is where Napoleon proposed to Josephine. The owner of the
restaurant, Chef Guy Martin, was looking for a partner to acquire the
restaurant and to do further development with him which was a perfect fit for
MM. Together we acquired our first bistro, La Mere LaChaise, we are currently
working on a second and third one and things are progressing very well. And
this is the history of MM, from 2 brands, we expanded from 2 brands to a total
of 14 brands, 11 of which are ours and 3 are franchised.

TET: How is Greyhound's fashion business performing?

The fashion business has turned around and is profitable now, we reduced the
high inventory and stores that were not profitable but we want to keep the
core flagship stores open, such as the one at Siam Paragon that is doing very
well, as a show case for the quality design and ideas that the team creates.
An example of the creativity of the team is that Honda Motorcycles which has
40 agencies in Thailand approached the Greyhound team to reimagine the stores,
clothing and to create a coffee bar concept. This is how Greyhound Coffee was
born, and today we now have 16 locations and there is an opportunity to expand
in the remaining agencies and perhaps outside of them in the future. Also K.
Bhanu and his team were approached by IKEA to create and design products for
the kitchen and household and now this is being showcased in IKEA Europe. So,
as you can see the creative quality of the team is there and we are working
closely together as a team to integrate the creative great designs into the
F&B stores as well.

TET: How has the F&B landscape changed in Thailand and how does MM
position its brands?

With Dunkin' we are going into a coffee direction, in the US they have
removed the word "Donut" and are aggressively competing with
Starbucks, initially focusing on coffee drip and now into expresso's
which are being promoted around the world to their franchises. Since last year
we began adopting the new strategy, adjusting the stores towards the coffee
concept with a darker mood, including breakfasts, donuts and muffins. We have
kept the transition quiet as 150 of the 300 stores have been converted, but
once they are completed you shall see us making noise. The coffee that we use
at Dunkin is really good as it is a blend of 30% Kenyan Beans and 70% Thai
Arabica beans. For Thailand we think that the country is still at the
beginning of the coffee culture because when looking at the data consumption
per capita is still low at 1 kg whereas in the US it is 5-6 kg and in Europe
it is 7 kg per capita.

Also with our own brands, we have launched new brands such as
"Kin-Hey" with the first branch opened at Groove targeting
white-collar workers, priced below Greyhound Cafe, it is mix of a Thai Izakaya
style and the feedback that we have received from customers has been positive
and the future looks very favorable.

Another new brand is Gai Hound, which is organic chicken rice where we work
closely with an organic farm, the first pilot store is located at Central
Embassy and this is also performing very well selling more than 100 plates per

Going forward we decided to no longer franchise new brands because we are in a
situation where we have garnered the knowledge necessary, built the teams and
where we can drive towards a brighter future. With Dunkin' as our cash
cow and Greyhound as our hero brand we will have to continually develop it
aggressively both domestically and internationally as I see a lot of potential
for Greyhound.

TET: What is the future for F&B in Thailand?

The future is all about product development, an easy example is After You they
create unique products constantly and do not just rely on their past success.
Greyhound is the same by creating unique twists on the staple foods in
Thailand or launching a chicken rice that now uses organic chicken. With
Dunkin' we launched a Takoyaki style Donut to attract people to the
store. The cycle is now becoming shorter for new product launches because the
consumer gets bored quickly, but what is interesting with consumer behavior is
that they will still stick with their favorite food.

For example, with Dunkin' the glazed Donut is our best seller and
continues to be, and when we launch a new product our customers will buy the
new product to taste it in addition to buying their favorite. And so, with
this change, the former way of forecasting projections for five years does not
work anymore, everyone must challenge themselves to be more creative and
create a variety of products.

Internally we have a Corporate Chef whose expertise is in bakery and pastry
and he's incredibly busy working with the team and outsourced teams to
research future products and the trends around town. The future of F&B in
Thailand is very bright, it is currently ranked #9 in the world but in five
years it is projected to be #6 in the world.

TET: MM recently announced a share buyback. What are the reasons for this?

We were of the viewpoint that the share price of the company was mis-valued in
the market and utilizing the financial management tools which are at our
disposal we announced a share repurchase program with a maximum budget of 100
million baht, not more than 20 million shares until March 2020.

TET: What impact have the Government Polices had upon your industry and

Whilst we applaud the government for being proactive in wanting to make
Thailand a healthier place for its citizens their approach to this can be
improved. For example, with the Transfat policy, the government has to
approach the suppliers of the materials that restauranteurs and street food
vendors use, and not just target the restauranteurs themselves. Because of our
volume we were able to have the suppliers change their oils to transfat so now
all of our donuts are transfat but in Thailand you still have millions of
street vendors that are re-using old oils all the time and so the effective
solution is to ensure that the suppliers change and not just the restaurants.

Thailand's real strength is in its food, the Thai people are incredibly
creative, and I believe that Thailand is fantastic for F&B and that it
will still grow and develop. One can see that there are young generation
Thai's returning from overseas and want to focus on artisanal products
whether it be sausages, chocolate, and rice and these all taste better than
what their peers may make in Europe and neighboring countries.

TET: What are the biggest challenges for MM?

The F&B industry is an exciting one with constant multiple challenges.
Today with the advent of technology has presented a new challenge where you
now have restaurants, where it is a ghost restaurant with only a kitchen and
working with the aggregators, no rent, minimal staff and just cooking.

However, on the other side you have the consumer today who is very different
from the consumer just five or ten years ago. They are more demanding now as
they have travelled the country, the region, the world, they want to taste
different things and have new experiences all the time.

Further to this Thailand's economic condition has been weak for the past
few years and we are not immune to this with some stores exhibiting negative
double digit declines, and with the malls increasing the F&B from 20% to
40% of space it has created a lot of competition and combined with decreasing
foot traffic creates a difficult situation for all involved. These are just a
portion of the challenges today and it is an exciting time to learn and to
develop ourselves in a way that benefit from these trend changes.

TET: Where do you expect to see MM in the future?

We will continue growing from the 500 stores that we have today. Given that
several of the senior management also have a hospitality background I would
not be surprised to see additional business channels in the hospitality sector
where we can create a more personalized experience combining food, lifestyle
and hospitality because it fits. France, for example, has thousands of
chateaus which have 10 rooms and great restaurants. This company has a long
future before it reaches its ceiling, we want to have more brands and
meaningful experiences.

About The Executive Q&A Series

The Executive Q&A Series is presented by ShareInvestor, Asia's
leading financial internet media and technology company and the largest
investor relations network in the region. The interview was conducted by Pon
Van Compernolle. For more information, email

Mudman PCL

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