01 - Combine bread flour, granulated sugar, active dry yeast, and salt in a large bowl or stand mixer.
02 - Add warm milk, room temperature egg, and softened butter. Mix until a soft dough forms, then knead for 8-10 minutes until smooth and elastic.
03 - Split dough into three portions: 60% for red flesh, 25% for white rind, and 15% for green skin.
04 - Knead red or pink gel food coloring and watermelon extract into the largest portion until evenly distributed. Fold in mini chocolate chips as seeds.
05 - Keep the medium portion plain for the white rind layer.
06 - Mix matcha powder or green food coloring into the smallest portion until color is uniform.
07 - Shape each dough portion into balls, place in separate greased bowls, cover, and let rise for 1 hour until doubled in size.
08 - Punch down each portion. Flatten red dough into a log the length of your loaf pan. Wrap white dough around the red log, then wrap green dough around both layers. Pinch seams to seal.
09 - Place loaf seam-side down in a greased 9x5-inch loaf pan. Cover and let rise for 30-45 minutes until puffy.
10 - Preheat oven to 350°F.
11 - Bake for 30-35 minutes, tenting with foil if the top browns too quickly.
12 - Cool in pan for 10 minutes, then remove and cool completely before slicing to reveal the watermelon pattern.