Monday 3rd September 2018
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Restaurant Brands New Zealand is exiting its Starbucks coffee business after two decades of operation after the US brand failed to take off as anticipated. It's selling the fixed assets of the chain for up to $4.4 million to local hospitality business Tahua Capital.
Auckland-based Restaurant Brands said it won't renew its licence agreement with Starbucks Coffee International, Inc. (SCI) when it expires next month. Tahua will enter into a new licence agreement with SCI, commit to a substantial store refurbishment and store opening programme, and plans to take over leases for the 22 stores and employ all the existing 300 staff.
Restaurant Brands acquired the local franchise rights for 50 cafes from Seattle-based Starbucks in 1998, opening its first store in Parnell, Auckland. However the company has said New Zealand coffee culture is “very sophisticated”, and it struggled to compete against local rivals.
In recent years the fast-food operator has scaled back its plans for Starbucks, closing unprofitable stores to focus its attention instead on higher growth opportunities such as expanding its KFC operation to Australia and taking over a Taco Bell and Pizza Hut operation in Hawaii. It's also eyeing expansion to the US mainland and further growth in its KFC, Pizza Hut and Taco Bell businesses.
"While the Starbucks business had provided a steady contribution to the group over a number of years, it was becoming less relevant to the company’s overall direction as it looked to further expand its core quick service restaurant brands in New Zealand and overseas," Restaurant Brands chair Ted van Arkel said in a statement.
Starbucks contributes less than 4 percent of Restaurant Brands’ total sales and earnings and the sale will dent annual net profit this year by about $1.3 million, the company said.
Restaurant Brands has agreed to provide interim support to Tahua with stock management and information technology services for up to a year.
Auckland-based Tahua was established specifically for the purpose of acquiring the assets of Starbucks New Zealand. Its owners have experience in other multi-site hospitality businesses including The Better Bar Company and Maestro Cafes.
Shares in Restaurant Brands last traded at $7.70 and have gained 19 percent over the past year. The stock is rated an average 'hold' according to data compiled by Reuters.
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