Muffin Break and Jamaica Blue proprietor FoodCo Group might quickly be the newest food franchise operation to discover sale options because it retreats from malls and seeks new income alternatives.
The strikes by FoodCo, which declined to remark to this column, discover such measures at a time when food retailers proceed to be hit arduous by rents and fierce competitors in buying malls.
Rivals like Sumo Salad have lately explored an analogous technique, diversifying into grocery store gross sales and putting agreements with airways and repair suppliers akin to hospitals, after at one stage being for sale and rescued from collapse by founder Luke Baylis.
Already available on the market is Boost Juice proprietor Retail Zoo, which has plans for an inventory by means of Citi. Asia-based personal fairness agency PAG is claimed to be in talks with Archer Capital to purchase Oporto Chicken proprietor Craveable Brands, which is suggested by Morgan Stanley, whereas Crust Pizza and Donut King is up for sale inside Retail Food Group.
Franchise operations are arising for sale as they continue to be beneath hearth following a current inquiry into the business analyzing the remedy of franchisees and practices similar to obligations to pay employees.
As a end result, banks are shying away from lending to the sector, compounding challenges linked to calls for from landlords.
With respect to Retail Zoo, the enterprise is known to be one of many sector’s stronger performers, with substantial earnings progress alternatives present for its Betty’s Burgers chain and enlargement alternatives for its Boost Juice enterprise in Asia, the place it already has a sizeable presence.
However, whereas the group has IPO plans, proprietor Bain Capital is planning the itemizing for later within the yr, provided that such weak sentiment exists within the sector.
One get together which will have approached Bain for an acquisition of the enterprise is US-based enterprise capital agency Sequoia Capital, though its curiosity has not been confirmed.
Retail analysts at Kepler Analytics keep that foot visitors is down 17 per cent year-on-year in buying malls.
Yet these within the business keep that rents stay at unsustainable ranges at a time when competitors ranges improve by 300 per cent. Another concern is landlords persevering with to take a “churn” strategy with tenants in an effort to retain excessive rents.