Fri Oct 21 02:38:37 CAT 2016

Mugg & bean joins famous brands

By Lihle Z Mtshali and Sapa | Jul 28, 2009 | COMMENTS [ 0 ]

THE acquisition by Famous Brands of Mugg & Bean bears testimony to the huge success of the coffee-house, analysts said yesterday.

Listed fast food franchisor Famous Brands has bought the South African and African business of Mugg & Bean for a cash consideration of R104million.

Famous Brands chief operating officer Kevin Hedderwick said yesterday his group's plan had always been to acquire and grow franchised brands.

"The Mugg & Bean brand fits perfectly into this strategy," he said.

Yesterday analysts gave the deal the thumbs up, saying it made sense. Nedcor Securities retail analyst Syd Vianello said: "Market talk is that Mugg & Bean has been one of the most successful South African franchise stories in recent history.

"The beauty of it is that it is totally home grown and developed by an experienced restaurateur."

Quinton Ivan, analyst at Coronation Asset Management, said the deal was in line with Famous Brands' strategy of owning either the number one or number two player in the market.

"Mugg & Bean is the number one player in the South African coffee category. Famous Brands already owns House of Coffees and Brazilian Café, and though those franchises are successful, the brand appeal is not nearly the quality of Mugg & Bean."

The Mugg & Bean franchise started in 1996, with the opening of the first restaurant in the V&A Waterfront in Cape Town. It has grown to 96 restaurants nationwide.

Ben Filmalter, founder of Mugg & Bean, said: "We are delighted to pass the torch to Famous Brands, whom we are confident will ensure the concept is further developed."

Famous Brands said the acquisition had translated into its gearing level increasing to 56percent.

Famous Brands' portfolio also includes Steers, Wimpy, FishAways and Tashas.


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