Taste liquidates Domino's Pizza South Africa
Struggling former owner of Starbucks says it is going to voluntarily liquidate Domino’s Pizza because it has failed to find a buyer for pizza franchise.
Taste Holdings [JSE:TAS] announced late in 2019 that it is exiting its food businesses (Starbucks, Domino’s Pizza Maxi's and The Fish & Chips Co), and that the company will shift its focus to luxury goods. The group’s luxury brands include NWJ, Arthur Kaplan and World's Finest Watches.
The company sold its Starbucks business to Rand Capital Coffee for R7 million in November. In the same month, Taste announced that it had also found a buyer for Maxi's and The Fish & Chips Co. The three brands were successfully disposed on 2 December 2019, after fulfilling certain conditions.
But for Domino’s Pizza, Taste Holding said on Monday that its board engaged with several suitors in order to dispose of the business but couldn’t close that deal.
“Domino’s Pizza LLC (DP) provided financial support and assistance during this period. Unfortunately, a deal could not be concluded on terms acceptable to all parties and further financial support was not provided by DP. As a result, it was decided to place the respective entities into voluntary liquidation,” said the company in a statement published on the Stock Exchange News Services.
The company said it is the process of liquidating Taste Food Franchising Proprietary Limited (TFF), Taste Commissary Proprietary Limited (TC) and Taste Food Trading 1 Proprietary Limited (TFT). The first entities are subsidiaries of Taste Holdings while and TFF owns and licenses the Domino’s business in South Africa.
The liquidation will leave employees in 82 of Domino’s Pizza franchises in SA and one in Maseru out of jobs. It will force also Taste Holdings to fully impair loans given to these subsidiaries by other businesses to the value of approximately R 450 million.
When Taste Holdings announced its intentions to exit the food business, the company said its management teams had calculated thar it will need at least R700 million to expand Starbucks network to between 150 and 200 cafés and Domino’s Pizza to between 220 and 280 restaurants for these brands to generate enough cash to fully support themselves and invest in growth.
Taste Holdings said after careful consideration and months of canvassing potential partners and capital providers, it became clear to the company it could not secure this required capital to expand its franchises, thus the decision to sell the food brands.