30-year Domino’s deal gives Taste a reason to cheerComment on this story
In news that boosted his company’s shares more than 10 percent yesterday, Taste Holdings chief executive Carlo Gonzaga said the Scooters Pizza and St Elmo’s brands would, before the end of this year, be replaced by the international Domino’s Pizza name but the taste would remain the same.
Gonzaga was speaking after Taste Holdings, which owns other brands such as The Fish & Chip Co, Zebro’s Chicken and Maxi’s, confirmed that it had entered into a 30-year master licence agreement with global pizza brand Domino’s Pizza.
The deal stipulates that Taste Holdings should initially develop the Domino’s Pizza brand in seven southern African countries: South Africa, Lesotho, Swaziland, Namibia, Botswana, Zimbabwe and Mozambique. Zambia and Malawi will follow on the fulfilment of certain conditions.
Founded in 1960, Domino’s Pizza has more than 10 800 stores in about 70 international markets including the US, India, Mexico and South Korea.
Gonzaga said pizza was an offering that Taste Holdings knew very well. “Scooters Pizza was our founding business and we have also noticed that pizza happens to be one category where the global leader is not in South Africa.”
He noted that KFC, the world’s biggest chicken restaurant franchise, had a presence in South Africa, as did McDonald’s and more recently Burger King. “On the pizza side there are only two big [global] players, that is Pizza Hut and Domino’s. It was a very natural move,” he said.
Gonzaga, who started Scooters 14 years ago, said he had based his business model on Domino’s Pizza. “The whole delivery pizza business and its delivery time promise were all based on Domino’s Pizza,” he said.
He said all Scooters Pizza and St Elmo’s franchises would change their branding to Domino’s by the end of this year’s calendar, but would not change the offering. “If anything, things are only going to get better from here on as customers will now have access to the world’s largest and most established pizza delivery brand.”
He believed that the timing was perfect for Taste Holdings to partner with a global brand. Over the past two years, Taste Holdings has been acquiring local franchises including The Fish & Chip Co and Zebro’s Chicken brands.
Evan Walker, a portfolio manager at 36One Asset Management, said the long-term franchise rights agreement with Domino’s Pizza was good news for the South African market. Walker believed pizza was one of the growing food offerings in South Africa, especially because of its value proposition.
Gonzaga said the South African market was very diverse and as pizza was finding its place among middle class households, Taste Holdings was finding more opportunities to sell the dish.
The announcement lifted shares in Taste Holdings as much as 17 percent on the JSE, before closing 10.19 percent higher at R4.