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Expanding Steers gobbles up Debonairs Pizza chain
FAST FOODS
STEERS has bought the 23-store Debonairs Pizza chain as part of a deal in which it acquired KwaZulu-Natal Steers licence holder, Fast Food Natal Trust (FFNT). A maximum price of R25-million will be paid for FFNT, based on the company's achieving warrantied after-tax profits of R3.5-million in three years' time. Steers financial director Nick Galatis says this means FFNT (including Debonairs) will account for between 20% and 25% of total group profits by 2000. The acquisition will be settled through the issue of shares with a maximum value of R25-million, pending the achievement of profit warranties by FFNT, and the payment of R1-million in cash. Steers managing director John Halamandres says plans are well advanced to increase Debonairs to 35 outlets by February 1998 and 130 by the turn of the century, making it the largest pizza chain in SA. The first outlet opened in Pietermaritzburg six years ago and expanded quickly into KwaZulu-Natal. More recently it expanded into Gauteng and other provinces. Debonairs stores are currently being built in Mauritius and Swaziland, and there are plans to move into Kenya, Namibia, Zimbabwe, Botswana and Mozambique next year. "Debonairs is an exciting new brand in the high-growth pizza market, with about 50% of its sales coming from home deliveries and the balance from over-the-counter sales," says Halamandres. "We were looking for a way to enter the pizza market, and Debonairs was a perfect fit for us. "Another benefit of the acquisition is the relatively low entry cost for franchisees. Set-up costs are about 60% of the cost of opening a Steers outlet." Excluding Debonairs, the Steers group comprises 225 outlets, with plans to open a further 25 before the end of the year. This includes nine Longhorn restaurants and 11 Mighty Pie outlets, which are to be modified to carry a wider range of bakery products. Some of the most exciting expansion opportunities are to be found north of the Limpopo, says Halamandres, where the group already has 12 outlets, "all of which are achieving higher turnovers than the average SA Steers outlet". Agreement has also been reached with Total, Engen and BP to open scaled-down Steers outlets alongside forecourt shops. Steers has been approved by commercial and industrial catering firm Kagiso Khulani Supervision Services, which plans to introduce well-known food brands into canteens around SA.
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