Sweet Revenue, Sour Margins — Why Melvados Should Be Banking It (But Isn't)

Skirted Expectations: Introduction

Melvados, the frozen gourmet food brand under Foodedge Gourmet Pte Ltd, is a textbook example of a business that looks better on paper than it performs on the bottom line. With a 20,000 ft² central production facility, hundreds of B2B clients including Singapore Airlines, Hilton, and FairPrice, and an expanding retail footprint in Singapore, it should, in theory, be printing cash. Its product mix — long shelf-life, high convenience, and indulgence-oriented — sits squarely in the post-COVID consumer sweet spot.

However, despite years of growth and diversification, Melvados remains only modestly profitable. Founders describe Melvados's financial stance as “running lean” and “focused on sustainability,” rather than growth or returns. It appears that margins are thin and cash flow is tighter than a business of this scale should allow. Today's blog features a more brief, casual analysis on why Melvados, despite serving a portfolio of major corporate clients, generates surprisingly minimal profits...

As well as a bonus ranking of my favourites:

1. Brownie Brittle

2. Cranberry Almond Cantuccini

3. Pisang Goreng

Unwrapping Melvados

Strategic Mispositioning

Melvados operates in the ready-to-eat (RTE) segment in the Consumer Packaged Goods (CPG) Industry, which offers strong shelf life and recurring demand, but little pricing power. Category-wide gross margins rarely exceed 25%, and success depends on 2 things: scale efficiency and ruthless cost control.

Melvados sells through both B2B institutional channels (including airlines, hotels and cafés) and D2C/retail (their own outlets, e-commerce, and listings on retail channels).

B2B Institutional sales deliver volume but are procurement-led and price-capped. Meanwhile, the D2C side carries more margin potential, but only if the brand carries weight. Unfortunately, Melvados lacks the brand capital and scale to generate economies of scale or command price premiums.

According to a Business Times (Nanyang Business School) study, unaided brand recall in 2022 was 20%, which is weak for a company betting heavily on standalone stores and impulse purchase behavior. Melvados expanded quickly between 2022-2024, opening 10+ physical outlets across Singapore. Retail footprint comes with high OPEX (rent, staffing, logistics etc.), but with low brand pull, footfall didn’t follow, and stores turned into cost centers instead of growth engines. Basically, Melvados seemingly invested like a lifestyle CPG, without the brand stickiness to justify it.

Inefficient Operational Structure

Melvados remains a closely held, family-controlled enterprise, with the founder’s daughter at the helm of branding and key positions reportedly occupied by relatives or long-tenured affiliates. Such stewardship is not inherently problematic, but often correlates with informal governance structures, lax cost controls, and a staffing model untethered from rigorous performance metrics.

Operating without external equity infusion (its paid-up capital stands at a modest S$2.19 million), the company eschews institutional financing. This capital conservatism constrains its ability to invest in modernisation, automation or scalable operational infrastructure. Concurrently, payroll expenses exhibit structural inflation, a common feature in family-run businesses where role redundancy and suboptimal resource allocation persist. The org chart reflects more tradition than meritocracy— a notion backed by anecdotal evidence.

In an environment characterised by compressed gross margins, even marginal excess in headcount imposes a disproportionate drag on bottom-line profitability.

Unsustainable Cost Base Post-COVID

While Melvados experienced post-COVID recovery in institutional volume (particularly from cafés, hotels, and airline caterers), this rebound did not translate to margin recovery. During the pandemic, the business expanded its D2C infrastructure aggressively: launching retail outlets, hiring for fulfillment, and incurring long-term fixed costs across logistics and staffing. These commitments were scaled under the assumption of sustained D2C traction, but post-pandemic footfall and order volume normalised below breakeven levels.

The resulting cost base is structurally bloated. High fixed expenses in a low-margin business created negative operating leverage. Without a corresponding uplift in high-margin channels, gross profit failed to scale with revenue while EBITDA remained flat despite top-line growth. Melvados became larger, but not leaner.

Lack of Risk Controls

From 2022-2023, Melvados faced input cost inflation across raw materials, packaging, and international freight, rising by 2-4x in some categories. Larger, institutional-grade food companies typically deploy hedging instruments, indexed procurement contracts, or diversified supplier networks to buffer such volatility. Melvados, operating without any of these mechanisms, was forced to absorb the full impact directly into its cost of goods sold.

Compounding the issue was the company’s inability to adjust downstream pricing. Key institutional clients purchase through fixed-term procurement contracts, where Melvados has minimal pricing power. The business operates on volume throughput, not margin per unit, hence without cost pass-through capabilities, gross margins were effectively compressed from both ends.

Further impairing profitability was a lack of Stock Keeping Unit (SKU)-level profitability tracking or margin attribution by channel. Without visibility into contribution margins across its product suite, Melvados was unable to identify and deprioritise underperforming SKUs. The result: a company adding revenue with every transaction, but diluting margin and value with each additional dollar.

Key Takeaway

Melvados doesn't check the boxes of a distressed asset. It boasts volume, infrastructure, and institutional relationships many mid-market operators would kill for. Yet, Melvados runs at operational equilibrium, not because it has optimised for cash flow, but because it lacks the governance, capital structure, and managerial velocity to escape it (at least in my opinion).

The issue isn’t product-market fit or demand generation; it’s that the business is structurally engineered for subsistence instead of scale. With no institutional capital or cost intelligence systems, and a governance model geared toward preservation over performance, Melvados has no internal levers left to pull. It has seemingly hit the ceiling of what a family-led, self-financed enterprise can achieve in a margin-constrained sector.

To the right investor, Melvados potentially represents a rare Southeast Asian platform: asset-heavy but margin-light, well-positioned in the consumer freezer, yet structurally misaligned with modern cost and growth dynamics. Inject professional governance, right-size the org, introduce channel-level profitability analytics, and enforce SKU rationalisation, and it could improve performance and unlock compounding.

Note: I am not a professional; simply a student with an interest in market research. Be sure to consult licensed professionals for any financial advice. (AKA Melvados, don't sue me).