Starbucks NZ’s new franchise owners, including the New Zealand-based investors behind Hannahs and Number One Shoes, say they will open new stores and refurbish existing ones. This is despite departing owner Restaurant Brands NZ closing stores and saying after two decades of operation the US brand failed to take off in New Zealand as they had hoped.
Restaurant Brands, which also owns the KFC, Pizza Hut and Taco Bell businesses, says it will get “up to 4.4 million” for the 22 Starbucks NZ stores from a group of private investors. They include the two men who last year bought former Hellaby Holdings shoe chains Hannahs and Number One Shoes. Restaurant Brands says it will exit the business next month when its licence agreement with Starbucks Coffee International expires.
The new owners, who set up Auckland-based Tahua Capital specifically to buy the assets of Starbucks NZ, include John Elliott and Roger Harper. The two men were initially brought into Helleby in 2016 as consultants to the footwear division, then set up Ngahuia Group to buy Hannahs and Number One Shoes last year, with backing from Australian private equity fund manager Allegro.
Elliott and Harper will be passive investors in Starbucks, keeping their day jobs in shoes. Starbucks operations will be taken over by another investor, Tahua’s new CEO Charles Belcher. Two private equity groups, Woodstar Holdings and Takapuna Investments are also taking a stake.
Belcher says overtures about buying the Starbucks operation came from the buyers’ side. “We’d been looking at Starbucks from the sidelines with aspirations to own it for several years. We all have interests in hospitality and saw it as a business opportunity.”
He won’t talk about any changes they might be planning for the Starbucks brand, positioning – or even the coffee. But he says over the medium term the investors are committed to opening new stores and refurbishing the existing 22 cafes. They also plan to retain the company’s 300 staff.
“While the Starbucks business had provided a steady contribution to the group over a number of years, it was becoming less relevant to the company’s overall direction.”
– Restaurant Brands chair Ted van Arkel
He says Restaurant Brands may not have considered Starbucks core to its operations, but the New Zealand franchise is profitable and “has a great future in New Zealand”.
Restaurant Brands acquired the Starbucks franchise rights for 50 cafes from Seattle-based Starbucks in 1998, opening its first store in Parnell, Auckland. However the company has complained in the past that New Zealand coffee culture is “very sophisticated”, and says it struggled to compete against local rivals.
In recent years the fast-food operator has scaled back its plans for Starbucks, closing unprofitable stores to focus its attention instead on what it says are higher growth opportunities elsewhere. These include expanding its KFC operation to Australia and taking over a Taco Bell and Pizza Hut operation in Hawaii. It’s also eyeing expansion to the US mainland and further growth in its KFC, Pizza Hut and Taco Bell businesses, according to Restaurant Brands chair Ted van Arkel.
“While the Starbucks business had provided a steady contribution to the group over a number of years, it was becoming less relevant to the company’s overall direction as it looked to further expand its core quick service restaurant brands in New Zealand and overseas.”
Starbucks contributes less than 4 percent of Restaurant Brands’ total sales and earnings, van Arkel says, though the sale will still dent annual net profit this year by about $1.3 million.
Restaurant Brands has agreed to provide interim support to Tahua with stock management and information technology services for up to a year.
Elliot says although he and Harper ended up working in shoes, the investors in Auckland-based Tahua have more than 140 years of hospitality experience between them. Elliott himself has worked for McDonald’s and Burger King in the past.
Shares in Restaurant Brands closed at $7.71 last night and have gained 19 percent over the past year. The stock is rated an average ‘hold’ according to data compiled by Reuters.
(BusinessDesk)
