HAVING agreed to lay out #180m for the United Biscuits restaurant
subsidiary which comprises 381 Wimpy restaurants, 131 Pizzaland
restaurants and 130 Perfect Pizza takeaway/home delivery pizza
outlets,it is not surprising that Allen Sheppard, the chairman and chief
executive of Grand Metropolitan, should say that the purchase provides
GrandMet ''with a rare opportunity to gain the sites needed to expand
our European retailing operations''.
At the beginning of this year GrandMet paid #3500m for the US group
Pillsbury which includes what is normally described as the
''struggling'' hamburger business, Burger King.
GrandMet which, with 15,000 outlets, describes itself as the world
leader in service retailing, has made it clear that its game plan is to
build up its catering side. It sees the purchase of Wimpy (which claims
a third of the UK hamburger market) and Pizzaland as an opportunity to
make Burger King, which at the moment only has 30 UK outlets, a much
bigger name in UK high streets.
According to a spokesman some of the Wimpy sites will become Burger
Kings but it is too early to say how many. GrandMet will also have to
discuss its plans with its franchisees.
It also sees the acquisition of Wimpy as a good platform from which to
expand the Burger King name in Europe. At the moment there are 148 Wimpy
bars and 23 Pizzaland restaurants in Europe. Essentially, GrandMet
regards the acquisition of the United Biscuits restaurant interests as a
means of strengthening its European retailing operations by providing a
portfolio of excellent sites which will enable major synergies to be
achieved.
In calendar year 1988, the United Biscuits restaurant business made a
trading profit of #11.2m out of sales of #147.4m but GrandMet obviously
feels that because of the economies of scale that it can obtain, it can
improve on the return in capital.
As for United Biscuits, the reason for selling its restaurants
business is to use the proceeds to build up its core business of
manufacturing biscuits, snacks, confectionery and frozen foods.
However a month ago it was dealt a heavy blow when the French company
BSN beat it to the punch on the bidding for the European interest of the
huge US group RJR Nabisco. The result is that BSN rather than United
Biscuits has become the biggest biscuit maker in Europe.
United Biscuits might well find other avenues for expansion in Europe
but at the moment it tends to be regarded as a potential takeover victim
rather than a potential predator. Despite denials the Swiss group Jacobs
Suchard is still regarded as a potential bidder even although a Suchard
bid for Cadbury Schweppes would seem more logical than a bid for UB.
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