SOUTH AFRICA – Taste Holdings, licensed operator of Starbucks and Domino’s Pizza in South Africa has sold13 stores of its coffee chain to a consortium, K2019548958 (South Africa) Proprietary Limited, for 7 million rand (US$464,000)
Taste opened the first Starbucks store in South Africa 2016 and the stores were set up at a cost of at least R5 million (US$ 338,000) each.
The company revealed it is also in discussions on the sale its licences for the Domino’s Pizza chain and its two other food businesses, restaurant chain Maxi’s and The Fish & Chips Co, to concentrate on its luxury goods division i.e. NWJ, Arthur Kaplan and World’s Finest Watches.
Taste has been battling a large debt burden and cash flow issues over the past few years and has been trying to turn-around its food business.
The company was planning to expand the Starbucks network to between 150 and 200 cafés and Domino’s to between 220 and 280 restaurants.
According to a statement by Taste, “After careful consideration, following months of operational reviews and canvassing potential partners and capital providers on this long-term objective, it has become evident that the capital investment required for this expansion strategy cannot be secured, given the current structure of the business and existing market conditions.”
“Taste’s board of directors has therefore revisited the previous strategy and has decided that it is in the best interests of the Company and all stakeholders to exit the food business,” the statement said.
Adrian Maizey, a director at Taste Holdings, will be taking over the Starbucks South Africa business as sole director of a company.
Taste will join Grand Parade Investments (GPI) in giving up on US franchises, with that group announcing in February it was disposing of Dunkin’ Donuts and Baskin-Robbins to channel capital into Burger King.
This is also the case with Famous Brands who is in the process of dumping its under performing UK chain, Gourmet Burger Kitchen (GBK).