Rising business costs have taken their toll on Sakae Holdings, operator of the Sakae Sushi chain, which has shuttered 10 of its 46 restaurants in the past few months.
The firm also has plans to cut six more by the first half of the year.
The listed company has been in loss-making mode over the last two years due to a sluggish economy and fierce competition in the food-and-beverage sector.
Its fourth-quarter net loss widened to $5.2 million from $4.7 million, while revenue fell 4.2 per cent. The firm on Thursday said it made a provision of $3.4 million in its fourth-quarter results for the early termination of leases as it closes its non-performing restaurants.
But its founder, Mr Douglas Foo, remains "confidently optimistic" as the company is focused on growing the Sakae brand overseas.
While the number of restaurants in Singapore will drop to about 30 this year, Sakae has 60-plus more in the region, including 40 in Malaysia. This year, it will launch in Myanmar with up to three restaurants. Sakae has another 80 associate restaurants in the region, in which it has a small stake.
"The Singapore market is very challenging because the general cost of operations, rentals, labour costs have gone up. But other markets are much more stable," Mr Foo, who is also Singapore Manufacturing Federation president, told The Straits Times yesterday.
"We are also competing with a lot more F&B establishments, which have sprung up in malls as more retail shops close. But all global brands, be it McDonald's or Starbucks, go through the same rationalisation at some time," he said.
But Sakae isn't banking its expansion hopes on restaurants. "To wait for each restaurant to earn returns is going to take too long," he said.
Instead, it set up Sakae Corporate Advisory in 2014 as part of a move to diversify into corporate advisory services to build financial resources for its global expansion.
Last month, the corporate advisory unit bought 20 per cent of a Hong Kong beauty products trader and will help restructure its business. "Once it has restructured, we will help it to list, and some of the capital raised will be used to fund more restaurant expansion," Mr Foo said.
To grow its revenues, the group finalised its collaboration with Chilean seafood trading firm Cocosa Holdings by acquiring 51 per cent of Cocosa Export, which trades in canned and frozen seafood.
"The primary reason for that partnership is to ensure we have sustainable seafood supply for our restaurants in the region. We also trade part of our supply through our distribution network to hotels and food-service companies," Mr Foo said. "Gross profit margins for the food trading business are still low because we have only just started working together. We'll need time to get the margins up," he added.