Famous Brands made a "game-changer" deal with the purchase of UK chain Gourmet Burger Kitchen (GBK) for R2.1bn — the group’s biggest acquisition yet.
The restaurant franchiser bought the chain, which makes handcrafted burgers, from investment firm Yellowwoods Group, which acquired the brand in 2010. The deal will be funded through cash.
This will be Famous Brands’ third brand in the UK, after it tried to win consumers over with Wimpy. It also exported Steers to the region — but neither has managed to really shift the needle.
"Wimpy has taken us a lot of time to repair," says Kevin Hedderwick, Famous Brands’ group strategic adviser. "We know we acquired a stressed asset in the UK, now the brand is in good nick. We had our best year ever last year, so the renovation of the Wimpy business is complete. The Steers business is always going to be a slow-burn process because people don’t know Steers."
He adds that GBK has applied best practice in its business that Famous Brands could bring back to SA.
"So it ticks every box that you can imagine ... We’ve now finally put a really strong mark in amarket like the UK, where we can earn a lot of hard currency."
Hedderwick notes that the purchase of GBK was to act as a rand hedge as more SA companies expand offshore "to protect themselves against the weak rand."
Though the post-Brexit slump is likely to be a concern for companies expanding into the UK, he is not too worried.
"We started this conversation before Brexit and we’ve watched the marketplace over the past few months, and in the food service space they are talking about 4% growth in turnover. And the nice thing is the GBK brand has outperformed the market and turned in consistent like-for-like sales growth," Hedderwick says.
The group also has plans to bring GBK to SA next year.