Johannesburg - JSE-listed Famous Brands has acquired a 51 percent controlling stake in Lupa Osteria, an authentic Italian restaurant business trading in the full service family casual dining segment.
Famous Brands’ chief executive Darren Hele said the company had opted for a 51 percent majority stake because the founders still wanted to be a part of the business.
Read: Famous Brands buys 51% of Italian chain
“We have a proven model whereby we partner with entrepreneurs who will work with us to drive their businesses. The owners didn’t want to sell out entirely, but they want to grow the business and be part of the future,” Hele said.
Lupa Osteria, which comprises three restaurants in the affluent KwaZulu-Natal suburbs of Hillcrest, Westville and Durban North, was founded in 2013 and franchised in 2014 by Guy Cluver and Chris Black, who together have more than 45 years experience in the hospitality industry. The group has made it known in the past that it is embarking on an ambitious 2020 growth strategy.
Hele took over the chief executive role from Kevin Hedderwick who stepped down in February after 16 years at the helm. Hedderwick, however, will remain as a group strategic advisor for another year.
Famous Brands, Hele said, wanted to grow Lupa Osteria to six restaurants in KZN to add to the group’s stable, which already has Mugg & Bean, Europa, Wimpy, Steers and Milky Lane on its list.
The group has a market capitalisation of more than R11.48 billion.
“Trading is buoyant in all three existing restaurants, with high levels of consumer acceptance, positive feedback and repeat business. We are confident that this offering is suitable for application in a wide range of new markets.
“In the short-term our plan is to grow Lupa’s footprint to six restaurants in KZN. We believe that over the long-term a network of 35 restaurants in South Africa and select African countries is achievable,” Hele said.
The purchase consideration falls below the threshold of a categorised transaction in terms of the listings requirements of the JSE Limited and will be settled from cash reserves.
Franchise
All suspensive conditions have been fulfilled and the effective date of the transaction is May 1.
Hele said over the past year the group’s stated strategy had been to explore and capitalise on opportunities in the casual dining category,which was one of the quickest growing segments in the restaurant industry over the past decade.
“Our more recent acquisitions, including the Mythos brand, demonstrate our progress in pursuit of this goal,” he said.
Famous Brands share price declined by 0.18 percent on the JSE to close at R116.50 yesterday.
Hele said the Lupa Osteria transaction would help the group to extend its presence in the market space.
He said Lupa Osteria would complement brand offerings such as Mythos, Turn N Tender and Tashas and would keep Famous Brands ahead of its competitors, including the strong international brands that were coming to South Africa.
“We continually focus on growing our existing brands, as well as entering new sectors of the market where we do not currently trade, and Lupa is an example of this as we don’t compete in this area.
“Most global brands are trying to enter existing markets and we will defend our market share in those arenas, but they do help to grow the category that they enter which we all benefit from,” he said.
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