Exit of Pizza Hut Victoria Announced
30 November 2006
Restaurant Brands Announces Exit of Pizza Hut Victoria
Market update – approaches received
Restaurant Brands today announced that it had reached agreement with its franchisor Yum to accelerate the company’s sale or exit from all of its 50 Pizza Hut Victoria stores. This is expected to be achieved by the end of the current financial year (February 2007).
The company said it had sale and purchase agreements for 35 stores, 14 of which will be transferred to new owners in the next few days. In addition the company has agreed with Yum to assist in the company’s exit of 10 stores early. Expressions of interest from prospective purchasers have been received for the remaining 5 stores, which are also expected to be sold by financial year end.
The total cost of the full exit from Victoria is expected to be NZ$9.0 million which includes the $2.6 million write-down of assets taken at the half year. The balance of $6.4 million will be taken up in the second half results and includes the write-off of $4.1 million of residual asset values (as advised to the market at half year) plus the sale and closure costs of stores, fees payable to Yum and provision for outstanding lease liabilities. The net cash cost is $1.3 million. As a result of the decision to exit this business, Pizza Hut Victoria was classified as a discontinued operation at the half year. The full exit will improve Restaurant Brands operating earnings by approximately $3.0 million in the 2007/08 year.
“We are pleased to have reached an agreement with Yum that allows us to exit this business more than a year before our franchise agreements end. This allows us to concentrate our efforts fully on the transformation of KFC, growth of Starbucks Coffee, and revitalization of Pizza Hut in New Zealand,” said Restaurant Brands Chief Executive Vicki Salmon.
The company also said that a number of parties have approached the Board of Directors and expressed interest in their potential participation in the future of the company.
Restaurant Brands is responding to these approaches and will keep the market updated of any developments as appropriate.