Domino's Pizza

Taste Holding’s makes big moves in pizza and chicken

Taste Holdings has signed a 30-year master licence agreement to develop the international Domino’s Pizza brand in Southern Africa. Domino’s Pizza is considered the world’s leading pizza delivery brand in both store numbers and unit sales, and has over 10,800 outlets in more than 70 countries. This news comes after its announcement last month of the R17m acquisition of Zebro’s Chicken.

Taste made the Domino’s announcement this week via a SENS statement declaring that it would become the group’s leading pizza brand. Franchisees of existing pizza brands such as Scooters Pizza and St Elmo’s will be given the opportunity and assistance to convert to Domino’s Pizza.

CEO of Taste Holdings and founder of Scooters Pizza, Carlo Gonzaga, says that both Scooters Pizza and St Elmo’s are based on similar principles and operating standards as Domino’s Pizza. He said the entry of a leading global pizza brand was a logical next step in the evolution of the South African pizza market.

Founded in 1960, Domino’s Pizza is the recognised world leader in pizza delivery, and delivers more than one million pizzas daily worldwide. It is the market leader in 38 markets, including the UK, India, Mexico, Australia, South Korea, Turkey and France.

The statement did not reveal the timeline of the rollout, but the first outlets are expected to open their doors later this year. No new Scooters Pizza or St Elmo’s stores will be opened for the next few months. New franchisee applications for new Domino’s Pizza stores will be accepted.

According to the statement the agreement allows Taste to market the brand in seven Southern African countries, including South Africa, Lesotho, Swaziland, Namibia, Botswana, Zimbabwe and Mozambique.  Zambia and Malawi will follow on the fulfillment of certain conditions.

Trying its (c)luck with chicken

Last month Taste said it would be winging its way into the chicken segment via the R17m purchase of Zebro’s, which has a mainstay market in the Western Cape.

Zebro’s Chicken is a 15-year old brand with 40 outlets, mainly in the Western and Eastern Cape. More than half the current 40 stores are based in the Western Cape – stretching from Cape Town’s northern suburbs as far afield as Knysna, Mossel Bay, Beaufort West and Ceres.

Taste CEO, Carlos Gonzaga, said the Zebro’s ‘pitch’ is that it prepares its products over an open fire similar to a South African ‘braai’ – which offers flavour differentiator in the competitive local chicken market.

“It is arguably the only chain of its size using this preparation method and flavour profile. Honestly, when I first heard of a chain that actually braai’d its product I didn’t think it was possible. Yet, after 15 years and over 40 stores, these guys have built a unique system and preparation method that is
unbelievably tasty.”

He said Zebro’s targeted mainly the lower-income consumers through low prices and large portions, and its core menu consists of chicken on the bone, chicken burgers, Russian-style sausages, fresh-cut chips and assorted salads.

Gonzaga said the limited menu and simple preparation method at Zebro’s meant the lowest set-up costs for new stores in its category as well as simplified in-store operations.

“This makes the brand accessible to a wider audience of franchisees and promotes multiple store ownership.”

The acquisition of Zebro’s complements Taste’s recent acquisition of the Fish & Chip Co, which also appeals to lower-income consumers with an affordable menu offering. Gonzaga said Zebro’s would offer potential and existing Taste franchisees another investment opportunity with low start-up costs aimed at the lower-income segment.

“There is a significant overlap to Taste’s existing vertical integration capacity in manufacturing and distribution and is complementary to the existing Fish & Chip Co brand.

“The current footprint does not include any meaningful penetration outside of the Western and Eastern Cape. We envisage accelerated store growth due to Zebro’s similarity to our existing The Fish & Chip Co business, which now comprises over 300 stores.”

He added that Zebro’ operated in a chicken segment that did not compete head on with the current market leaders in terms of product or preparation.

Like The Fish & Chip Co deal, the big long-term gains for Taste won’t only come from expanding the Zebro’s footprint.

The quality sustainable profits will be generated by Taste’s food services division, which manufactures all its pizza sauces, bastings and table sauces at a HACCP2-accredited facility in Cape Town.

Sources: SENS, Cape Business News