Taste still sees an opportunity for growth in these two brands, despite reporting an overall loss of R317.63 million for the year to the end of February.
Chief executive Dylan Pienaar in an interview on Friday said the group had completed its restructuring and a complete turnaround in the business was under way.
“Part of the plan involves opening six Starbucks and 10 Domino’s Pizza stores until 2020.
“Thereafter, we are planning to grow beyond the six and 10 stores a year. We believe there is a huge amount of room for these brands in South Africa to prosper,” Pienaar said. During the past financial year, Taste concluded a R132m rights offer to fund expansion for both Starbucks and Domino’s. The group plans to open two of the six Starbucks stores in KwaZulu-Natal, encouraged by the positive performance by one of its stores in Durban.
“Our Starbucks Gateway store was the best-performing store in the country, and it shows that there is a huge demand for coffee in the province,” Pienaar said.
The planned expansion comes after the group identified the problem areas in its food division, a process which took six months to complete. As a result, the new store rollout plan includes substantially reduced set-up costs.
The revised strategy also necessitated the closure of underperforming stores in its portfolio, which included four Domino’s, eight Maxi’s and two in The Fish & Chip company, which were closed during the last reporting period.
Taste operates two divisions - the food and luxury goods divisions.
The revised strategy approved by the board involves a business plan that envisages a turnaround and resumed growth aligned to realistic milestones set for the year-end and through the next decade.
“When we sat down to determine the group’s challenges in the past, we realised that the previous management focused on the next 12 months to determine its financial plan.
“But we changed that to a 10-year forecast, as we believed this would be an ideal position to determine the group’s financial prospects going forward,” Pienaar said.
He added that the group was not expecting to return to profitability in a short space of time.
“We would probably still make losses in the next two to three financial years, but declining losses.
“We have put these projections, taking into consideration that the country will be in this low economic growth dominated by subdued consumer spending. However, if the economy improves, that will be a bonus for us,” he said.