The three entrepreneurs who control this business, namely, Radu Dimofte, Nicolae Badea and Lucian Vlad, plan to sell, through an initial public offering (IPO), a minority stake of 20-25% of the group’s shares. The group includes some 100 restaurants which register sales of nearly RON600 million in 2016.
Between 2011 and 2016, the business more than doubled, due mainly to investments in expansion projects. The business was profitable from one year to another, as KFC Romania alone saw a net profit margin of 11%. The listing could bring the three businesspeople several dozen million euros, according to ZF estimations.
Raiffeisen and Wood act as intermediaries for this operation which could bring a new sector, that of restaurants, to the Romanian capital market, after MedLife opened the medical services market, in December 2016, and Digi was the first telecom operator on the local stock market, in May 2017. In the case of Sphera Franchise Group (the umbrella company operating KFC and Pizza Hut), the sale of shares will be operated by the three founders of the business, not by investment funds or other minority shareholders. Gabriel Popoviciu was also one of the founders of the KFC and Pizza Hut business, but he sold his stake to the other three, according to the latest data from Ziarul Financiar.
The listing, which is expected to take place in the fall of 2017, might become a way of financing the expansion plans of the three entrepreneurs. The listing was recently preceded by an operation whereby the three businessmen brought under the umbrella of the same holding, Sphera Franchise Group, the KFC operations in Romania, the Republic of Moldova and north-eastern Italy, as well as the Pizza Hut and Pizza Hut Delivery operations on the local market.
Mark Hilton, the British executive running the group’s local operations, recently told an interview for ZF that the move will create the biggest player on the food service market (restaurants) with a total turnover of over EUR130 million (RON585 million). McDonald’s, with a turnover of over RON600 million in 2016, currently is the largest player on the Romanian fast-food restaurant market.
The KFC and Pizza Hut brands has each been operated until recently by a separate legal entity, namely, by US Food Network (KFC) and American Restaurant System (Pizza Hut and Pizza Hut Delivery), respectively.
The three entrepreneurs mentioned above brought to Romania the KFC and Pizza Hut brands in franchise system more than two decades ago. KFC and Pizza Hut have always been present locally in franchise system and the three have developed the business continuously. Moreover, they expanded the operations on two new markets, the Republic of Moldova and Italy, respectively.
The franchise of international chain Taco Bell might reach Romania soon, through Sphera Franchise Group. Company officials neither confirmed nor denied this move.