Taste has renewed appetite for expansion

26 May 2019 - 00:04 By MUDIWA GAVAZA


Taste Holdings, which has sole rights to US-based Domino's Pizza and Starbucks Coffee in SA, is back on the path to growth after a period of liquidity challenges, says CEO Dylan Pienaar.
"Currently we don't have any debt," Pienaar, who was promoted from COO in March, told Business Times on Friday.
In January, shareholders approved a R132m rights offer, the latest in a series for the group. In total, about R936m has been raised since 2014.
Pienaar said the group still needed to raise capital, but another rights offer was unlikely at the moment.
After a temporary freeze on new Starbucks and Domino's outlets, Pienaar said: "We've picked up where we left off."
Taste planned to open 10 Domino's and six Starbucks outlets in the next year, and had already signed three new leases for Starbucks, he said.
The company still has to prove this to shareholders. On Friday, it said in a trading update it was likely to report a loss, albeit a smaller one compared to the same period last year, when it reports annual results at end-May.
Tyrone Moodley, who preceded Pienaar as CEO and is now a nonexecutive director, said research showed consumers were looking for more convenience and would accept smaller stores. "It was music to my ears," he said, because it meant Taste could adjust its costing model for store locations in future.
"The mistake we made was building too many large-format stores," said Pienaar, referring to the big outlets in Gauteng.
Globally, Starbucks tends to have many small locations around a city. Moodley said this was the direction Taste hoped to go in.
Pienaar said Domino's and Starbucks in the US had been supportive of their plan for a turnaround. "We realised we have to focus the business," Pienaar said. There were two areas that needed to be addressed.
First, a decision was taken to split the business's food operations from the luxury goods division, which includes jewellery brands Arthur Kaplan and NWJ. These are now standalone businesses, he said.
Second, Taste abandoned its integrated business strategy in favour of outsourcing some functions such as supply chain management.
"It [logistics] was something we were not good at," Pienaar said.
Taste has chosen to partner with Digistics, a logistics company that services other players in the quick-service restaurant business in SA. Taste has since wound down its own logistics business.
The strategy in both divisions of Taste is to focus on franchising and operating its stores.
The group has also chosen to decentralise its management structures. Whereas it had functions such as human resources and marketing at group level, these have now been established within each business unit.
This had resulted in a scaled-down management structure at Taste, Moodley said.

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