SOUTH AFRICA – Small fast-food and restaurant franchise company Gold Brands International (GBI) has acquired a joint venture for an undisclosed sum to secure exclusive rights to roll out the Ed’s Diner brand in SA.
Gold Brands said on Tuesday the deal followed a 2016 decision to contest the gourmet burger market. It had reviewed various concepts over the past 18 months and that Ed’s met all the requirements management had in mind for the concept.
The group believed the brand could be rolled out throughout SA in its present form.
The JSE’s oldest restaurant franchiser, Spur Corporation, has recently enjoyed much success in rolling out its “smash” burger brand RocoMamas in selected venues across SA.
Ed’s is based on a retro American Diner concept – focusing on gourmet burgers, grills, salads and pizzas. It has outlets in Pretoria East and the University of Pretoria’s Groenkloof Campus.
The deal does not appear to be a significant one, with Gold Brands indicating that the transaction value represented less than 5% of the company’s market capitalisation of R66m.
Gold Brands share price has fallen about 30% over the past 12 months.
Vunani Securities analyst Anthony Clark asked why Gold Brands was acquiring more brands when the company was clearly short of the capital needed to roll out stores.
Gold Brands revolves mainly around its Chesanyama brand, but the company also holds 1+1 Pizza, Blacksteer, Opa!Pitaland as well as rights to international brands such as Café Rouge, Bella Italia, Las Iguanas and Belgo.
At the end of the February financial year, Gold Brands posted a net loss of R48.5m and its current liabilities exceeded current assets by almost R18m.
It also reported a hefty drop in turnover from R235m to R143m after the closure of more than 155 underperforming franchises and a halt in the opening of new franchises.