Empire Sushi eyes smaller towns, Sabah for next growth leg: CIMB

KUALA LUMPUR: Empire Premium Food Bhd sees further expansion opportunities in less penetrated markets, particularly smaller towns such as Kangar, Kota Belud and Kuala Terengganu, CIMB Securities Sdn Bhd said.

The firm said the Empire Sushi operator sees room to grow in these areas due to relatively limited competition, while it also plans to accelerate its expansion in Sabah in financial year 2028 (FY28).

Empire Premium opened 15 new Empire Sushi outlets in the first half of FY27, while three existing outlets were temporarily closed for upgrading works.

This brought its total operating outlets to 155 as of the end of the second quarter of FY27 (Q2 FY27), up 8.4 per cent from 143 outlets at the end of the financial year ended March 2026.

CIMB Securities said Empire Premium expects its store expansion momentum to remain healthy, with four new outlets targeted for October 2026, three in November, one in December and another in January 2027.

Of the planned openings, six will be quick dine-in outlets featuring conveyor belt formats aimed at family consumers, while the remaining outlets will operate under the grab-and-go format.

The firm said Empire Premium continued to record healthy sales momentum in Q2 FY27.

It said sales were supported not only by new store openings but also by continued product launches, with year-on-year same-store sales growth expected to remain positive in the quarter.

"We also understand that the company's fast-moving consumer goods products are seeing encouraging traction. Empire Sushi continues to target 18 new store openings per annum across FY27–FY29, slightly below our forecast of 20 new stores annually.

"We see ample runway given its concentration in malls and shopping centres, with airports and train stations offering additional opportunities.

"Geographic whitespace also remains vast, presenting room to expand to Sabah, given only 6 stores operating in Sarawak vs. 155 stores nationwide," it said.

CIMB Securities said the upcoming 2027 Budget could provide further support for demand, as targeted assistance and cost-of-living measures are expected to help sustain household purchasing power.

However, it said a potential increase in the minimum wage from the current RM1,700 a month could put modest near-term pressure on margins.

This is due to Empire Sushi's estimated 1,500 employees, with staff costs accounting for about 40 per cent of cost of goods sold, which itself represents about 22.9 per cent of FY26 revenue.

"Nevertheless, we expect the impact to be minimal, as most store employees are already paid above RM2,000 per month.

"Over the longer term, higher wages should lift disposable income among Empire Sushi's core low- to middle-income customer base, supporting transaction volumes and spending frequency," it said.

CIMB Securities said Empire Sushi is well positioned to benefit from stronger household spending, supported by the affordable pricing of its offerings.

The firm retained its "Buy" call and kept its target price unchanged at RM1.36.