South African food business Taste Holdings says it is planning to voluntarily liquidate its food business. As such, its Domino’s Pizza franchise will now be shut down because the company was unable to land a buyer.
The Johannesburg Stock Exchange-listed firm announced in 2019 that it will be exiting Starbucks, Domino’s Pizza Maxi’s and The Fish & Chips Co.
Going by what it same at the same time, Taste Holdings will be shifting its focus to luxury goods, a space in which it already has NWJ, Arthur Kaplan and World’s Finest Watches brands.
The offloading started in November when it sold its Starbucks business to Rand Capital Coffee in a ZAR 7 Mn deal. In the same month, the South African firm said it had found a buyer for Maxi’s and The Fish & Chips.
On 2nd December, 2019, Taste successfully disposed 3 brands after fulfilling certain conditions. But having failed to offload is Domino’s Pizza Franchise, the wind up will see 770 employees lose their jobs. 55 stores owned by the company have closed in the country.
Taste’s problems seemed to have begun in February 2019, when it faced problem with retail sales. The company needed over USD 42 Mn to achieve a positive cash flow and expand the food businesses. In spite of raising ZAR 132 Mn through a rights offer, it came up short in securing the required funding.
“Domino’s Pizza LLC was extensively involved in finding a buyer for our licence and approached other franchisees in their global network as potential suitors,” said Taste Holdings’ CEO, Duncan Crosson.
“However, discussions with three master franchise partners, as well as various global suitors, finally collapsed this week, triggering the voluntary liquidation decision.”
With more than 10,800 outlets in over 70 countries, Domino’s Pizza is one of the best-known pizza delivery brands in the world, delivering about 1.5 million pizzas globally everyday.
Taste Holdings signed an exclusive 30-year master licence agreement to develop the international brand in South Africa. Meanwhile it has been struggling to stabilize its Starbucks business. The franchise’s stores narrowed their losses in 2019 to USD 3.5 Mn.
“The loss was due to a combination of constrained consumer spending and the settling of revenues post the brand launch honeymoon period, which is typified by exaggerated revenues,” Taste said in its an annual report.
Featured Image: The Drum
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