Looking for acquisitions that will double revenue over the next three years with news US giant Burger King may be coming to South Africa.
Graduate to Johannesburg’s main bourse, Taste Holdings, is looking for acquisition opportunities to double revenue over the next three years, amid rising competition with talk of the imminent entry of the US Burger King chain.
In the next 24 months, Taste would be looking for opportunities, CEO Carlo Gonzaga said at a function last week to mark its move to the JSE main board, from AltX. The move to the main board is more symbolic as the costs largely remain the same, said Noah Greenhill, senior GM: marketing and business development at the JSE. "It’s the choice of the issuer really."
Taste, which owns Scooters and St Elmo’s pizza chains, and Maxi’s, listed on the AltX in 2006. It would be looking at expanding its pizza business after last year’s purchase of the St Elmo’s chain of 40 outlets, Mr Gonzaga said.
Pizza is becoming a more important segment, as the traditional players in the market have "underestimated" the emerging consumer, an analyst, who wished to remain anonymous, said. "The challenge will be opening up more outlets in township areas." Burger King said last month it was assessing opportunities in SA as sluggish economic growth in its US home market continued to hamper sales, making emerging markets look more attractive.
Founded in 1954, the US company is the second-largest fast-food hamburger chain in the world, after McDonald’s, with about 12000 outlets in 73 countries. About 90% of Burger King restaurants are owned and operated by independent franchisees, with 665 of these outlets based in the US.
Listed South African fast-food companies such as Famous Brands have been eyeing a presence in SA’s lucrative chicken category, dominated by Nando’s and KFC, owned by US firm Yum.
Last August, Famous Brands bought Giramundo to add flame- grilled chicken to its group of outlets. "Chicken is a big category, and in reality there are very little opportunities," Mr Gonzaga said. "It’s a well-traded category."
Taste reported annual revenue to February of R233,7m, compared with larger rival Famous Brands’ R1,8bn revenue over the same period. Famous Brands owns Steers, Wimpy and Mugg & Bean brands. While there are some growth areas in the restaurant and fast-food sector, local consumers remain under pressure, which is set to continue, according to analysts.
Rising inflation has led to forecasts of higher interest rates in the latter part of the fourth quarter.