| Fri 12 May 2006, 15:50 | | Scooters Pizza and Maxi's to list |
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Scooters Pizza and Maxi's to list
Ana Monteiro
Posted: Fri, 12 May 2006 08:00 | ¬ Moneyweb Holdings Limited, 1997-2006
Taste Holdings, parent company of Scooters Pizza and MaxiÆs restaurants, will be making its debut on the JSEÆs sister bourse for smaller companies, AltX, in June at 90c a share.
Taste CEO Carlo Gonzaga says there has been ôenormous interestö in the listing, in which 20% of the companyÆs share capital û 25m shares û will be floated in order to raise upwards of R22,5m.
The first Scooters Pizza outlet opened in Westville, Durban in September 2000. NandoÆs is a 32% shareholder and NandoÆs MD Kevin Utian serves on the board. Serial entrepreneur and Enaleni Pharmaceuticals CEO Trevor Edwards is also on the board and is an investor.
There are 91 Scooters outlets in the group, and with the purchase of MaxiÆs in April 2005, the groupÆs total store compliment comes to 130.
ôWe plan to grow to 160 Scooters and 200 MaxiÆs stores,ö says Gonzaga.
Taste does not have a division that supplies to its franchisees and thus differs from its rival, Famous Brands.
ôWe donÆt own the supply chain but do control it, so we negotiate with farmers and pork processors on franchiseesÆ behalf. Owning the supply chain could be a constraint to growth at this stage. For example, we donÆt have to worry about getting more trucks for distribution if we more outlets are opened,ö says Gonzaga.
Gonzaga says developing a supply service for franchisees could be an opportunity once the company reaches 300 to 400 outlets. ôWe do not have capex requirements for growth right now,ö he says.
The group itself employs 26 people, although over 2 500 people are employed in outlets by franchises.
Taste does not own any of the stores. ôWe are purely a franchising business, primarily involved in establishing new franchises, marking the brands and controlling the operations of the franchised outlets,ö says Gonzaga.
Why list?
With only 20% of the share capital being floated, Gonzaga says the listing is more about accelerating the growth of existing brands and helping the franchises secure scarce top retail space: ôSome developers prefer to deal with listed companies. The Tygervalleys and Gateways of the world are a small club.ö Outlets occupy over 16 000m2 of rented retail space.
Heightened awareness of the brands makes it easier to acquire other brands, something that Taste intends to pursue. Also, the listing provides flexibility for funding those acquisitions.
Taste CFO Duncan Crosson says that for the year to end-February 2006, system-wide sales grew by 165% to R241m, boosted by the MaxiÆs acquisition. ôOn a like-for-like basis, sales were up 22%, and revenue was up 88%, with MaxiÆs accounting for 40%ö.
Operating profit was up 45% although the company did not provide actual numbers.
How much for a pizza shop?
Prospective franchisees can expect to pay R820 000 for a Scooters franchise, 40% of which would need to be in cash. This includes training, working capital, shop fitting and licence fees.
The management fee a franchisee would need to pay over is 7% of turnover, while the royalty fee is 5% of turnover, ôthe highest in its category,ö says Gonzaga.
The price for a MaxiÆs franchise is around R1,9m; management fees amount to 5% of turnover, with a further 4% for royalties.
Taste management starts a road show to potential investors next week. Gonzaga says the company has already received R10m in commitments from franchisees.
This story first appeared in Moneyweb Business in the Citizen
