Johannesburg - Dunkin’ Brands is set to tap into South Africa’s sweet tooth after signing a 10-year exclusive licence agreement with Cape Town-based gaming and leisure group, Grand Parade Investments (GPI).
GPI shares on Friday rose as much as 7.8 percent before closing up 2.7 percent at R3.81, which valued the company at R1.9 billion, after it said it would open more than 250 Dunkin’ Donuts restaurants and more than 70 Baskin-Robbins shops over the next 10 years.
It said it would invest R210 million over the next 10 years in the deal, which would be funded off its own balance sheet and it did not expect to raise any third-party debt.
GPI also has the right of first refusal to enter Namibia, Botswana, Zambia and Mauritius with the Dunkin’ Donuts and Baskin-Robbins.
The deal was expected to have a minimal impact on the earnings for the group in the short term, the company said.
“The board of GPI believes that partnering with such highly-respected global brands provides the ideal platform to further establish the company’s food business and it plans to roll out its first Dunkin’ Donuts restaurant and Baskin-Robbins shop in the second half of 2016,” the company said.
GPI said the franchise agreement allowed it to capitalise on its existing experience in the management of quick-service restaurants. “It also affirms GPI’s strategy to expand its food portfolio by investing in respected and market-leading brands,” it added.
The deal will be opened through both corporate-owned stores and franchised outlets initially in Cape Town and Johannesburg, the company said.
GPI has previously signed an exclusive franchise agreement with US fast-food brand Burger King in 2013 and opened 26 new stores in the year to June last year and has a total of 44 Burger King stores right now. However, Burger King contributed a R55.1m loss to GPI’s group headline earnings.
Dunkin’ was the latest US-based fast-food chain to expand to the South African market after Starbucks, Krispy Kreme and Burger King.
Dunkin’ Donuts is one of the world’s leading coffee and bakery chains, with more than 11 500 outlets in 40 countries worldwide selling more than 1.8 billion cups of coffee a year.
More than 50 percent of Dunkin’ Donuts global sales consist of coffee sales.
Baskin-Robbins is the world’s largest chain of ice-cream specialty outlets known for its “31 flavours” and creative range of frozen desserts. There were more than 7 600 Baskin-Robbins outlets in nearly 50 countries.
The agreement also calls for the introduction of Baskin-Robbins ice-cream products to supermarket chains and convenience stores.
BUSINESS REPORT