
<p>JOHANNESBURG (Reuters) &#8211; South Africa’s Taste Holdings is in the process of placing its food businesses into voluntary liquidation after a failed attempt to offload its Domino’s Pizza franchise.</p>



<p>Taste’s move to liquidate the business comes after South Africa entered its second recession in two years in the final quarter of last year. </p>



<p>It will see 770 employees lose their jobs, while 55 stores owned by the company have closed, said Taste, whose food businesses own and license Domino’s Pizza franchises in South Africa.  </p>



<p>In February last year Taste, which has been facing poor retail sales, estimated it required more than 700 million rand  ($42 million) to achieve a positive cash flow and expand its food businesses which also included Starbucks store franchises. </p>



<p>But despite raising 132 million rand via a rights offer, it failed to secure the required investment. In November it said it would sell its Starbucks and Domino’s Pizza franchises in South Africa, retreating from a food industry that has been hit hard by the sluggish local economy, whose woes have been compounded by the global coronavirus outbreak.</p>



<p>However, Taste on Monday said a deal to dispose of its Domino’s franchise business could not be concluded on terms acceptable to all parties.  </p>



<p>“Domino’s Pizza LLC was extensively involved in finding a buyer for our licence and approached other franchisees in their global network as potential suitors,” Taste Holdings Chief Executive Duncan Crosson said. </p>



<p>“However, discussions with three master franchise partners, as well as various global suitors, finally collapsed this week, triggering the voluntary liquidation decision.” </p>



<p>It added that it has received no communication on the date of cancellation of the franchising licence, “the group retains the regional franchising licence until further notice”.  </p>



<p>Following the liquidation of Taste’s food businesses &#8211; Taste Food Franchising Proprietary, Taste Commissary Proprietary and Taste Food Trading 1 Proprietary Ltd &#8211; the company will have to fully impair the remaining intercompany loans, with the units valued at about 450 million rand ($27.38 million).</p>



<p>Taste Food Franchising Proprietary owns and licenses Domino’s Pizza franchises in South Africa. </p>



<p>($1 = 16.6449 rand) </p>



<p>(Reporting by Shanima A in Bengaluru and Nqobile Dludla in Johannesburg; Editing by Devika Syamnath and Pravin Char)</p>



<p>This article was first published on Reuters Africa <a href="https://af.reuters.com/article/investingNews/idAFKBN21324E-OZABS">https://af.reuters.com/article/investingNews/idAFKBN21324E-OZABS</a> and is republished with its permission.</p>


Taste Holdings to liquidate food business, hitting 770 jobs

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<p>The management of the food franchising company Taste Holdings – the company behind the brands Starbucks and Dominos Pizza -will meet with staff set to lose their jobs in the company’s liquidation. Taste Holdings has closed down 55 stores making 770 workers redundant. The liquidation came after Taste Holdings failed to find a buyer for its licencing agreement for Dominos Pizza. Duncan Crosson, CEO of Taste holdings joins CNBC Africa for more.</p>


Taste Holdings liquidates its food business

Taste Holdings liquidates its food business, CEO Duncan Crosson sheds more light on the way forward

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<p>Taste Holdings, the food and luxury goods retailer has been struggling to find its footing in a changing economy. The company, which owned the licence to American brand, Starbucks coffee until recently, has had to offload its other food brands as it tries to claw back some investor value. Joining CNBC Africa is newly appointed CEO, Duncan Crosson.</p>


Food business no longer Taste’s speciality

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<p>Taste Holdings is disposing its Starbucks franchise in South Africa for R7 million. It is being bought by a consortium of shareholders, including Rand Group, which is owned by Adrian Maizey, a non-executive director of Taste. Independent Analyst Anthony Clark joins CNBC Africa for more.</p>


Taste spills the beans on Starbucks SA’s failure

Taste spills the beans on Starbucks SA


<p>By Kopano Gumbi, CNBC Africa reporter </p>



<p>South African franchisor Taste has been burned by Starbucks coffee. The retailer announced on Friday that it would be selling the Starbucks franchise for R7 million. According to its 2016 annual results, the flagship Rosebank store cost R8.3 million to build. They went on to build 12 more stores. </p>



<p>From licencing fees, to recapitalisation and loans, it is estimated that Taste spent over R1.4 billion trying to keep Starbucks afloat. The company said it would cost at least R700 million more to reach positive cash flow, and that Starbucks would need to expand to up to 200 cafes to become profitable. Taste now says it is exiting the food business completely as it takes a new strategic direction, this includes selling its Domino&#8217;s pizza franchises as well. </p>



<p>It will be sold to a consortium including Rand Group Limited, which is controlled by a non-executive director of Taste Holdings.&nbsp; The separation comes after years of struggling to operationalise the American coffee brand.</p>



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<p>Rand Group&#8217;s Adrian Maizey that it will work with &#8220;Starbucks in this new capacity with a well-funded consortium of investors to help achieve the aggressive growth targets we have for the brand in South Africa&#8221;. </p>



<p>In response to the purchase Starbucks said &#8220;in partnership with Taste, we have opened 13 successful stores across 3 cities and this new relationship will provide the necessary capital to achieve our ambition of up to 200 stores.&#8221;  </p>



<p>In 2018, Taste had to suspend the roll-out of stores after financial troubles in the group saw losses grow significantly. They did a rights offer in January 2018, were extended an additional line of credit by their <a href="https://www.cnbcafrica.com/videos/2019/10/17/sean-riskowitz-on-what-ramaphosa-should-do-to-attract-foreign-investment/">American investor, Sean Riskowitz</a>, and then did another capital raise of R132 million, by floating an additional two million ordinary shares at 10 cents each.</p>


Taste Holdings sells Starbucks franchise for a song after spending over a billion


<p>By  Kopano Gumbi, CNBC Africa&#8217;s market reporter </p>



<p>“That will be one venti line of credit” is what the board of
Taste Holdings is essentially saying to the market. </p>



<p>The debt-laden franchisor, which owns the South African licence for Starbucks and Domino’s Pizza reckons it has a way out of the troubled year it had in 2018 and says its international partners are in support of its plans. This may be hard to believe given the food retailers performance last year. Much like its industry peers, Taste’s food division performed dismally. It recorded a 51 percent increase in its annual losses from 2017 to 2018 and had to abruptly halt the roll out of Starbucks stores, when it ran out of money.</p>



<p>“We want to build stores cheaper, and we think we know how
now,” said Chairman Grant Pattison, at the company’s annual general meeting. </p>



<p>It has been almost exactly a year since it did a rights
offer at the end of January 2018. Today, the business is looking to raise R132 million
($9.6m) by floating an additional two million ordinary shares at 10 cents each.
It hopes to inject enough cash to get it through the year.</p>



<p>This—on the back of a R50 million to R200 million credit
line that was extended to it, just four short months ago. Shareholders
overwhelmingly voted yes to this capital raise. </p>



<p>Taste plans to resume rolling out Starbucks stores as soon
as it receives the money from the rights offer, which could be as soon as March
2019.&nbsp; Just how many stores the retailer
will start to open isn’t as clear. Pattison admits it over- capitalised on its
flagship Domino’s and Starbucks stores which has led to a “re-evaluation on
both sides”. He did however, signal that the new stores wouldn’t be as large or
as expensive to build.</p>



<p>“Last year was a year of discovery” says Tyrone Moodley,
chief executive of Taste Holdings. He says the business was forced to
interrogate its existing business and international partner models. Board and
executive management changes also contributed to instability at the company.</p>



<p>Pattison- who is also the chairman of the Edcon Group-
reiterates full faith in the executive management, and believes CEO Moodley, is
uniquely positioned to steer this ship, given his keen eye for investment.</p>



<p>The investment community questioned whether delisting was on
the cards, which Pattison emphatically denied. </p>



<p>“There have been no discussions at board level about
delisting,” says Pattison. But given the position Taste is in, one has to
wonder if it wouldn’t benefit from being off the board?</p>


Why Taste has no plans to delist, reveals plans for Starbucks & 2019

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<p>Taste Holdings says it remains bearish about a material sales recovery in the next six months and that it will continue to invest in marketing expenditure and enhancing the customer value proposition. Taste reported its interim results saying that revenue was down 9 per cent to R483 million and operating profit also took a dive to R73 million from loss of R41 million. Loss attributable to equity holders widened to R66 million versus loss of R34 million. Carlo Gonzaga, Taste Holdings CEO joins CNBC Africa for more.</p>


Taste Holdings

Taste Holdings to liquidate food business, hitting 770 jobs

Taste Holdings liquidates its food business, CEO Duncan Crosson sheds more light on the way forward

Food business no longer Taste’s speciality

Taste spills the beans on Starbucks SA

Taste Holdings sells Starbucks franchise for a song after spending over a billion

Why Taste has no plans to delist, reveals plans for Starbucks & 2019

Taste Holdings first-half loss widens

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Taste Holdings

Taste Holdings to liquidate food business, hitting 770 jobs

Taste Holdings liquidates its food business, CEO Duncan Crosson sheds more light on the way forward

Food business no longer Taste’s speciality

Taste spills the beans on Starbucks SA

Taste Holdings sells Starbucks franchise for a song after spending over a billion

Why Taste has no plans to delist, reveals plans for Starbucks & 2019

Taste Holdings first-half loss widens

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