Listed company Taste says it will dispose of two food brands – Maxi’s and Fish & Chip Co – in-line with its new strategy to exit the local food market.
The disposal is subject to a number of conditions, but is expected to become effective on or about 2 December 2019.
The group told shareholders at the start of November that it has adopted a new strategic direction to sell all of the Taste food brands – being Starbucks, Domino’s Pizza, Maxi’s and The Fish & Chips Co.
“The company has, following detailed operational reviews and canvassing potential partners and capital providers, reached the conclusion that Taste should change its strategic direction and exit the food business,” it said.
“The outcome of this strategy would be for Taste to become a focused luxury retail group consisting of NWJ, Arthur Kaplan and World’s Finest Watches,” it said.
Following the disposal of Starbucks earlier in the month, and Maxi’s and Fish & Chip Co now, the only brand in the group’s food stable left to sell is the Domino’s master franchise licence.
Both the Starbucks and Domino’s licences were costing Taste over R7 million a year in royalty fees, while the franchises themselves were not proving to be as profitable as hoped.
Starbucks in particular created a burden on the group’s books, with Taste admitting that to get the coffee franchise up to sustainable levels, it would require about R700 million in capital – which it could not source from investors.
“It has become evident that capital investment required for the previous expansion strategy cannot be secured, given the current structure of the business and existing market conditions,” it said at the time.
There are around 22 Maxi’s and 110 Fish & Chip Co outlets in South Africa. Taste did not disclose which company or group it is selling the franchises to.