After You, the Thai dessert cafe hitting the sweet spot for global restaurant stocks

Shares have almost tripled this year, vastly outperforming second place Chinese hot-pot chain Haidilao and third place Chipotle Mexican Grill

After You Dessert Cafe opened 10 new outlets in the first half of this year and plans to open its first overseas franchise store, in Hong Kong, by the end of the year. Photo: After You
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The world’s best-performing restaurant stock this year comes from the home of “tom yum goong” soup and pad thai. But Thailand’s After You isn’t about spicy red peppers or curry, instead it sells brownies, pudding and elaborate pancakes.

After You shares have almost tripled this year. By comparison, gains of the next-best performing restaurants, Chinese hot-pot chain Haidilao and Chipotle Mexican Grill, rose at less than half that pace, according to data compiled by Bloomberg on restaurant operators with market values of at least $300 million (Dh1.1bn).

“After You has very high growth potential based on its strong brand in the domestic market and overseas expansion plans,” said Poramet Tongbua, an analyst at Bualuang Securities. “The coming earnings results will give an indication of the level and pace of upside potential.”

After You’s rally has helped propel the company to become the biggest in Thailand’s Market for Alternative Investment, the stock exchange’s second-tier board for 161 small and medium-sized firms. With a slogan of “there’s always room for dessert,” After You opened its first outlet in 2007, and now has 36 stores nationwide. It specialises in desserts and pastries including brownies, puddings and cheesecake, and serves pancakes with fruit and nuts all day.

Thailand’s landscape is crowded with coffee shops and cafes selling sweets. Aside from international giants Starbucks and McDonald’s, some of the country’s richest people — including billionaires Charoen Sirivadhanabhakdi, Dhanin Chearavanont and William Heinecke — have invested in retail cafe businesses to capitalise on Thailand’s expanding middle class and urbanisation.

Thailand isn't alone with its interest in cafes. Manila-based Jollibee Foods said Wednesday that it would spend $350m to buy Coffee Bean & Tea Leaf, the biggest acquisition by Southeast Asia's largest restaurant company. Jolibee shares fell for a seventh day in a row on Wednesday.

After You’s “core profit” in the second quarter probably more than doubled from a year earlier to a quarterly record on higher sales of take-home products, according to a Bualuang Securities’ report. About 96 per cent of revenue last year came from cafe sales, including take-home orders, with the rest from catering and “pop up” events.

It opened 10 new outlets in the first half of this year, four of which were in cities outside of Bangkok, owing to “high purchasing power in upcountry malls and areas,” according to its website. After You also said it will open its first overseas franchise store, in Hong Kong, by the end of the year.