01 - In a large bowl or stand mixer, combine bread flour, granulated sugar, active dry yeast, and salt. Mix thoroughly to distribute yeast evenly.
02 - Add warm milk, room temperature egg, and softened butter to the dry mixture. Mix on low speed until a soft dough forms, then knead for 8-10 minutes until smooth and elastic.
03 - Separate dough into three portions: 60% (approximately 2 cups) for the red flesh, 25% (about 3/4 cup) for the white rind, and 15% (about 1/2 cup) for the green skin.
04 - Add red or pink gel food coloring and watermelon extract to the largest portion. Knead until color is evenly distributed throughout the dough. Gently fold in mini chocolate chips to simulate seeds.
05 - Leave the medium portion plain without coloring to create the white rind layer of the watermelon effect.
06 - Mix matcha powder or green food coloring into the smallest dough portion. Knead thoroughly until the green color is uniform.
07 - Shape each colored portion into smooth balls and place in separate greased bowls. Cover with plastic wrap or kitchen towels. Let rise for 1 hour until doubled in size.
08 - Punch down each dough portion. Flatten the red dough into a log the length of a 9x5-inch loaf pan. Wrap the white dough around the red log, then flatten and wrap the green dough around both layers to create three concentric circles. Pinch seams tightly to seal.
09 - Place the formed loaf seam-side down in a greased 9x5-inch loaf pan. Cover and let rise for 30-45 minutes until puffy and nearly doubled.
10 - Preheat oven to 350°F.
11 - Bake for 30-35 minutes. If the top begins to brown too quickly, tent loosely with aluminum foil after 20 minutes. The bread is done when golden brown and sounds hollow when tapped.
12 - Cool in the pan for 10 minutes, then carefully remove to a wire rack. Allow to cool completely before slicing to reveal the watermelon pattern inside.