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- Restaurant group Spur said on Thursday it will acquire a 60% interest in the Doppio Group, which includes the Doppio Zero brand, Piza e Vino, and Modern Tailors.
- It signals its first big move into the lucrative speciality coffee market.
- The acquisition will also give Spur options for further expansion across the country, while also stimulating its daytime offering.
- For more financial news, go to the News24 Business front page.
Spur Corporation, which owns brands such as RocoMamas, Hussar Grill and John Dory's, will acquire a 60% interest in the Doppio Group in its first big move into SA's lucrative coffee speciality market.
Making the announcement on Thursday, Spur said that the Doppio Zero brand, which is owned by the Doppio Group along with Piza e Vino and Indian cuisine offering Modern Tailors, had "extensive expertise in the coffee speciality, offering a bakery café experience during the day and more sophisticated dining experience at night".
At the same time, it said the acquisition, the value of which it didn't disclose, will give Spur its first significant daytime dining option. This is a segment which CEO Val Nichas told News24 had shown particularly strong growth in the aftermath of the Covid-19 pandemic.
"Post Covid, we definitely saw that because of all the lock down regulations and restaurants having to close early, there had been a shift," she said on Thursday.
"Although dinner trade has improved in the last few months, especially in speciality [restaurants], people are not staying out as late as they used to, so day trade is also very important. Our big objective is to amplify our speciality day trade."
She said the group's speciality dining portfolio was currently more tilted towards evening dining through its Hussar Grill, Nikos and Casa Bella brands, and that brands like Doppio Zero enjoyed significant daytime trade. Its mainstream brands, such as its namesake steakhouse brand, RocoMamas and Panarottis, experienced both strong daytime trading and evening traffic.
Spur intends to expand the Doppio Group restaurant brands across SA, with Nichas saying the company viewed the transaction as "value-accretive" for both it and Doppio's founders, Paul Christie and Miki Milovanovic, who will continue to each hold a 20% interest in a "newco" vehicle that will house the Doppio brands. Spur will own 60% of this vehicle. The Doppio Group's 669 employees will also be transferred to Spur Corporation.
Nichas said the intention was not only to "clip on this group of restaurants" to the Spur group but also to grow the network.
She said Doppio Group had a very strong presence in Gauteng, in particular, which provided the opportunity for the Spur group's network to look to expand it elsewhere.
The two founders, who will stay on as executives for a minimum of five years, established the first Doppio Zero in Greenside 21 years ago. Their business has since evolved into a portfolio of 37 franchised and company-owned restaurants, as well as a bakery and a central supply business. Spur said the Doppio Group had generated sales of over R600 million in the year to end February.
Nichas said more details on the value of the deal would be disclosed following its expected finalisation at the beginning of September. The group would be using its "free cash" to acquire its interest.
Coffee hunt
The deal came as no surprise to Small Talk Daily analyst Anthony Clark, who said it was well-known in the market the company had been looking for a coffee acquisition for many years, adding that he knew of at least five possible deals the group had looked at previously.
The hurdle Spur had faced was that most of the great coffee brands tended to be regionalised and had already been snapped up by other restaurant groups, or their owners simply did not want to sell, said Clark.
"At the end of the day, the casual dining coffee culture, of people popping out to coffee shops to meet friends and working from coffee shops has now become the new trend, and I think Spur Corporation was one of the few companies in the fast-food sector which didn't have a casual coffee operation."
He viewed the Doppio transaction as a " good deal" for Spur, saying it had bought a business with the ability to scale given that Spur had "no debt, net cash on the balance sheet and a nationwide footprint".
"And given that [Spur] is in every mall in the country, it will be much easier for them to negotiate with landlords to get their new brand into their foodcourt area because they already have nationwide representation and nationwide coverage. Let us also not forget all the benefits of centralised procurement and all the savings that brings. I would say it is a very good deal."
Makwe Masilela, who heads up Makwe Fund Managers, also viewed it as a positive transaction for Spur, saying it would "definitely work for them" especially with day-time restaurant and coffee culture continuing to gain traction with a lot of South Africans still working from home.
"I think it is a wise move of them to be part of that space and generally with people continuing to work from home, this deal will come in handy. People are meeting in coffee shops and restaurants more and more during the day so it's not just consumers using them on weekends," he said.
As for whether Spur would be considering any other acquisitions, Nichas said the company was always "exploring for growth".
"Obviously our main focus remains our own brands to ensure they are well looked after, that their expansion, marketing and operational standards are good, so that's our primary focus. But absolutely we are exploring different opportunities in categories or markets where we maybe don't enjoy a big market share."
