Taste Holdings to roll out more stores under new turnaround strategy

SOUTH AFRICA – Taste Holdings, South Africa’s licensed operator of Starbucks Coffee and Domino’s Pizza, has unveiled plans of opening more outlets as part of its strategy to lift the company’s balance sheets.

According to the group’s chief executive, Dylan Pienaar, the group had completed its restructuring and a complete turnaround in the business was under way.

He said that the company still sees an opportunity for growth in both Starbucks and Domino’s Pizza brands, despite reporting an overall loss of US$21.51 million for the year to the end of February.

Pienaar said that Taste Holdings is confident that the expansion plan will support the company’s move on returning to profitability in the long run.

“Part of the plan involves opening six Starbucks and 10 Domino’s Pizza stores until 2020.

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“Thereafter, we are planning to grow beyond the six and 10 stores a year. We believe there is a huge amount of room for these brands in South Africa to prosper,” Pienaar said.

“During the past financial year, Taste concluded a R132m (US$8.94M) rights offer to fund expansion for both Starbucks and Domino’s. The group plans to open two of the six Starbucks stores in KwaZulu-Natal, encouraged by the positive performance by one of its stores in Durban,” Pienaar said.

According to an update by Business Report, the planned expansion comes after the group identified major constrains in its food division, a process which took six months to complete.

The revised strategy also necessitated the closure of underperforming stores in its portfolio, which included four Domino’s, eight Maxi’s and two in The Fish & Chip Company, which were closed during the last reporting period.

Taste, which operates two divisions – the food and luxury goods divisions- said that the new store rollout plan includes substantially reduced set-up costs.

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The revised strategy approved by the board involves a business plan that envisages a turnaround and resumed growth aligned to realistic milestones set for the year-end and through the next decade.

“When we sat down to determine the group’s challenges in the past, we realised that the previous management focused on the next 12 months to determine its financial plan.

“But we changed that to a 10-year forecast, as we believed this would be an ideal position to determine the group’s financial prospects going forward,” Pienaar said.

He added that the group was not expecting to return to profitability in a short space of time.

“We would probably still make losses in the next two to three financial years, but declining losses.

“We have put these projections, taking into consideration that the country will be in this low economic growth dominated by subdued consumer spending. However, if the economy improves, that will be a bonus for us,” he said.

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