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RFG to snap up Cafe2U and La Porchetta

Sarah Stowe

Retail Food Group is continuing with acquisitions, announcing its intent to purchase mobile coffee business Cafe2U and the Italian casual dining chain La Porchetta.

The company announced its entry into Share Purchase Agreements (SPAs) to acquire the 236 outlet Cafe2U mobile coffee franchise and 70 outlet La Porchetta casual dining franchised system, with completion due mid-September and late October 2014 respectively.

CEO Tony Alford noted that, “these transactions represent the culmination of significant and wide-ranging acquisitive opportunity investigation and due diligence activity undertaken over the course of the past 18 months, and demonstrate RFG’s commitment to supplementing organic growth via acquisition of quality complementary brand systems capable of generating enhanced earnings and increased scale.”

Both transactions will be funded from cash reserves.

CAFE2U

The acquisition of Cafe2U complements RFG’s November 2012 acquisition of The Coffee Guy brand system.

Alford said “The transaction validates the position expressed to the market in 2012 that mobile coffee represents an industry segment ripe for consolidation, and possessing of genuine opportunity for international exploitation.

“Whilst RFG’s intention is to retain and develop the individual identities of both the Cafe2U and The Coffee Guy brand systems, the acquisition generates significant synergistic opportunities.”

The additional coffee brand will deliver further strategic benefits including immediate scale in the Australian market, manufacturing and coffee roasting synergies, and expanded penetration in key offshore markets.

In addition to the 157 units in Australia, there are 11 Cafe2U units in New Zealand, 62 units in the UK, five in the US and one in South Africa.

Cafe2U managing director, Derek Black, will remain with the business and will continue to direct the business under the oversight of RFG’s national office.

LA PORCHETTA

La Porchetta is Australia’s largest family-orientated Italian themed casual dining restaurant franchise system and its acquisition represents a further strategic expansion by RFG into the casual dining segment following its acquisition of Pizza Capers and Crust Gourmet Pizza in 2012.

There are 70 fully franchised outlets – 62 in Australia, eight in New Zealand.

Alford said, ‘the very successful entry of RFG into the QSR category, and the commendable performance of Pizza Capers and Crust Gourmet Pizza over the past two years, is now augmented through the La Porchetta transaction, further consolidating the company’s position as a genuine retail food leader in Australia and New Zealand with strong platforms and iconic brand systems across light meals, treat, specialist coffee, QSR and now casual dining.”

La Porchetta CEO Sara Pantaleo will continue to lead the brand system team.

Due diligence in relation to the acquisition has commenced. RFG will advise the market once this, and other transaction conditions, have been satisfied.

The news of acquisitions was released at the same times as RFG’s results.

RFG chairman Colin Archer indicated that RFG’s FY14 performance was driven by the successful implementation of previous strategic decisions which are now bearing significant fruit despite the challenging retail environment.“

“Of particular note, the company’s resolve to enter the Quick Service Restaurant (QSR) segment via acquisition of the Pizza Capers and Crust Brand Systems has proven a masterstroke, with QSR contribution to group EBITDA now representing 22.7 percent, or $13.5m. Importantly, neither brand system has reached maturity,  thereby affording the company significant potential for new outlet growth which is presently being driven by RFG’s Project QSR400 initiative,” he said.

The enhancement of traditional brand systems through the Project EVO initiative, and the QSR400 initiative form “a bedrock for organic growth which will contribute to group earnings for many years” he said.