Flash Coffee defends Singapore exit, says regional biz in good shape

When Flash Coffee exited Singapore in October, doubts were cast about the health of its entire business, which counts Indonesia as its biggest market.

Now that the dust is settling, the company, which is backed by startup factory Rocket Internet and Foodpanda owner Delivery Hero, is dispeling any notion that it’s in trouble.

In fact, Flash Coffee is “nearing EBITDA breakeven in the coming months” in some of its markets, a spokesperson tells Tech in Asia

In its fundraising announcement in May, Flash Coffee also said that all of its stores in Indonesia, which number 93 to date, were profitable. Out of the company’s over 200 stores across Southeast Asia, Singapore accounted for only 11.

Photo credit: Flash Coffee

Flash Coffee achieved this despite facing stiff competition from Fore Coffee and Kopi Kenangan, which operate 141 and 880 outlets in Indonesia, respectively, in the “premium but more affordable than Starbucks” category.

While Flash Coffee did not offer details about its financial runway, it talked about securing roughly US$10 million in funding this year. This was an extension of the company’s US$40 million series B round in 2022, which was led by White Star Capital.

Still, Flash Coffee admitted that its Singapore stores were struggling. According to the spokesperson, the business did “lag behind in performance,” which the company blamed on a shift in consumer behavior once Covid-19 protocols were loosened.

While Flash Coffee was able to improve its performance in the city-state, it ended up having to focus capital on other markets that are “significantly closer to profitability.”

Answering to creditors

Another sticking point with the shutdown, which happened via a voluntary liquidation, is owed wages.

Liquidator BDO Advisory confirmed that Flash Coffee owes over S$300,000 worth of salaries and contractual benefits out of a total S$14.9 million in liabilities, though to be clear, the majority were to its holding company.

This raised the question: If the company isn’t in financial trouble, why didn’t it pay salaries for retrenched Singapore employees?

Addressing this, the Flash Coffee spokesperson stressed that outstanding payments to staff are being prioritized above other creditors.

“Our employees in Singapore have yet to receive part of their latest wages but are expected to receive the remainder in full, plus encashment of unused annual leave, plus notice in-lieu payment,” he explains.

Other options besides liquidation