26 Oct 2016

Restaurant Brands eyes Pacific expansion

2:20 pm on 26 October 2016

Fast food operator Restaurant Brands has made a flat first-half net profit, but plans to expand into the Pacific and will add Taco Bell to its family of brands.

Restaurant Brands, which owns several fast food brands including KFC, intends to expand in the South Island.

Restaurant Brands operates Pizza Hut, Starbucks, Carl's Jr and KFC in New Zealand and New South Wales. Photo: PHOTO NZ

The company, which operates Pizza Hut, Starbucks, Carl's Jr and KFC in New Zealand and New South Wales, made a first-half net profit of $13.5 million in the six months ended 12 September, which was little changed from the year earlier, as it incurred one-time franchise and administration costs.

When those items were excluded, the net profit rose 22 percent to $15.9m.

Group sales rose 22 percent to $266.9m, which reflected earnings from its recently-acquired KFC stores in Australia and new Carl's Jr stores in New Zealand.

Same-store sales rose 1.4 percent, with KFC New Zealand accounting for 60 percent of the revenue.

Restaurant Brands has also taken a further step to expand its business, with a $US105m ($NZ147m) deal to buy an Hawaiian-based company, Pacific Island Restaurants (PIR).

PIR operates 45 Pizza Hut and 37 Taco Bell - a well-known Mexican fast food product - in Hawaii and Guam and Saipan in the Mariana Islands.

"The acquisition of PIR provides the next stage to Restaurant Brand's growth platform and aligns with our growth strategy" said Restaurant Brands chief executive Russel Creedy.

Hawaii has solid growth and the Taco Bell brand had strong margins, he said.

"We also see a number of other potential bolt-on opportunities in the market that we may look to pursue over time where they make strategic and financial sense."

Restaurant Brands will fund the deal with a $US42m bank loan and a $NZ94m share offer of one new share for every 5.15 currently owned.

The new shares are being offered at $4.70 a share, a near 14 percent discount to its last traded price. Restaurant Brands has been put on a trading halt while the issue is finalised.

The retail offer opens on Monday and closes on 16 November.