MIDAS SHARE TIPS UPDATE: Egg-free bakery chain Cake Box has a winning formula

MIDAS SHARE TIPS UPDATE: Egg-free bakery chain Cake Box has a winning formula with turnover set to rise

Bakery: Cake Box was founded by cousins Sukh Chamdal and Pardip Dass in 2008

One in 20 people in the UK is allergic to eggs, according to the British Society for Allergy & Clinical Immunology. 

That’s more than three million people. Hundreds of thousands of British Hindus, Buddhists and Sikhs do not eat eggs for religious reasons.

But Cake Box is determined to let them all eat cake. A bakery chain specialising in egg-free cakes it was founded by cousins Sukh Chamdal and Pardip Dass in 2008.

Since then the firm has gone from strength to strength, gaining popularity not just with the original target audience but egg eaters too.

The company joined the junior Aim market in June last year, and the shares were recommended by Midas immediately after at a price of £1.38. Today the stock is £1.58 and brokers believe the price should continue to rise.

A trading update last week gave grounds for optimism. In the year to March 31, 2019, turnover rose 30 per cent to more than £17million.

Like-for-like sales growth, which excludes the effect of new openings, increased by 6.5 per cent, an impressive figure in today’s tough retail environment.

The group, based in Enfield, North London, now has 114 franchises, it is opening two new stores a month and hopes to expand to 250 in time.

Profit for the year to March 31, 2019 is set to rise more than 20 per cent to £4million, with a maiden dividend of 3.6p. Further gains are pencilled in for the future. 

Midas verdict: Chamdal and Dass have created a winning formula. Average weekly turnover is £6,900 per store and rising, as customers respond to affordable prices, attentive service and personalised cakes on demand. 

Investors have already seen decent returns but Cake Box should keep on delivering. The founders still own 50.1 per cent of the business too, so they are highly incentivised to make a success of it. 

Traded on: Aim Ticker: CBOX Contact: investors.eggfreecake.co.uk or 020 8443 1113



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