Honey Bun scouting locations for expansion
Baked goods company Honey Bun is in active search mode, scouting locations to bring outlets to major towns across Jamaica.
Chief Sales & Marketing Officer Dustin Chong said the company has been having a hard time securing locations but was committed to the plan.
Honey Bun 1982 Limited operates six locations in Kingston -- at East Street, Princess Street, Papine, Half-Way Tree, Cross Roads, and its factory at Retirement Crescent. Chong said branches were recently opened in Ocho Rios, Spanish Town and Old Harbour, and yet another is to be opened in Montego Bay in another few days. The company’s plans also call for other locations in Linstead and Savanna-la-Mar by September.
In an interview with the Financial Gleaner after the company’s annual general meeting on Wednesday, Chong said Honey Bun has been steadily growing its distribution network since 2020 starting with four locations, but accelerated the pace of the roll-outs back in February 2022.
There are now nine distribution outlets, with three more to come by the end of summer.
The shift in distribution strategy resulted in improvements in the pace of growth, from eight per cent in 2020 to 28 per cent in 2021, and 38 per cent in 2022. CEO Michelle Chong told shareholders on Wednesday that the revenue boost was directly attributable to better distribution and increased exports.
Daniel Chong added that Honey Bun has found the distribution model to be “very effective in reaching customers” in far-flung areas. He says some of the outlets actually double as distribution hubs as well, served by a fleet of small trucks.
“It is more effective. We get to cover the rural areas, and it allows for small shops and persons who want to buy in bulk to come to the outlet and purchase and go back to their location to sell,” he said.
CEO Chong says Honey Bun’s plans for the future are rooted in continuous automation; cost reduction; greater efficiencies, measured weekly; development of new outlets in distribution; new products and new markets – a formula that has been serving the company well, she added.
“That is what makes us strong, because we’re consistently seeking to achieve these things,” the CEO said.
The pastry and bread maker’s sales for year ending September 2022 was just shy of $3 billion, a new record and all-time high for the company.
However, Honey Bun wasn’t able to sustain its profit margins due to higher costs. Its net profit margin thinned from 13.5 per cent in FY2021 to nine per cent in FY2022, due to a fall in profit.
Chong noted, however, that for the first quarter ending December, the net profit margin recovered to 11.4 per cent, due mainly to increased automation and greater efficiencies.
Honey Bun began as a small retail bakery with a pastry shop storefront in Premier Plaza, Kingston, in 1982. The company went public and listed on the Jamaica Stock Exchange in 2011.