South African Taste Holdings gives up on the Domino’s Pizza and Starbucks franchise

South African Taste Holdings gives up on the Domino’s Pizza and Starbucks franchise

In 2016 the United States coffee chain, Starbucks, entered South Africa under licence by business franchise management group Taste Holdings. After three years of people thronging and queuing for a hot cup of coffee and an all too familiar misspelling of their name, Taste Holdings has decided to dump the coffee brand; selling it for R7 million ($464,200).

Sadly, the relationship between Taste Holdings and Starbucks is not the only one to be severed. The franchisor is also considering selling others in its food business, including Domino’s Pizza, as part of a new plan to become a luxury retail group.

After spending R8.3 million (over $550 thousand) on building the flagship Rosebank store in Johanessburg and 12 other stores around South Africa, Taste Holdings sold the coffee franchise for R7 million ($464,200), saying that it could not secure the capital required to fund its previous strategy aimed at bringing Starbucks and Domino’s to break-even.

In 2018, Taste Holdings recorded losses, suspended the roll-out of stores and eventually did a rights offer. An additional line of credit by their American investor, Sean Riskowitz, and were extended and the company also did another capital raise of R132 million (8.74 million), by floating an additional two million ordinary shares at 10 cents each.

However, Starbucks on Wednesday reported quarterly revenue that topped analysts’ expectations as cafes in the U.S. and China attracted more customers. The coffee chain reported fiscal fourth-quarter net income of $802.9 million, or 67 cents per share, up from $755.8 million, or 56 cents per share, a year earlier.

It is reported that Starbucks will be sold to a consortium including Rand Group Limited, which is controlled by a non-executive director of Taste Holdings.