Taste Holdings, a JSE listed management group with the operational license for Starbucks and Domino’s Pizza in South Africa, sold 13 of its Starbucks stores at 7 million rand (R540, 000 per store) last week.
In a statement released by the management group, it was revealed that Taste’s exit from the food business is part of a revised strategy to concentrate solely on its luxury goods division.
Taste announced that a company identified as K2019548958 (South Africa) Proprietary Limited, bought the Starbucks franchise and are the new owners of the coffee chain in South Africa.
Over the past few years, Taste has been battling a large debt burden and cash flow issues ranging from licencing fees to recapitalization and loans. The company has estimated over R1.4 billion in trying to keep only Starbucks afloat.
In 2018, The management group reported that it did not see a sufficient return on its Starbucks investment with an operational loss of R87 million in the last six months of the year.
The current economic state in South Africa also contributed significantly to Taste’s exit from the food business, with an aborted expansion plan of 200 Starbucks cafes and 280 Domino’s restaurant resulting from South Africa’s existing market conditions.
Nonetheless, it is predicted that workers in over 500 stores belonging to Taste’s food division will lose their jobs. This will inevitably influence the latest 29.1 percent unemployment rate in Africa’s second-largest economy.
Following the sale of all its food assets such as Domino’s pizza outlets, Maxi’s restaurant chain and The Fish & Chips Co, Taste will maintain the exclusive luxury retail portfolio it desires.
This luxury retail division includes jewellery brands NWJ, Arthur Kaplan and World’s Finest Watches. Taste Holdings fixated on its agenda to become a luxury retail company is seeking to establish an exclusive opulent world in South Africa.
By Treasure Nnabugwu