South Africa’s Taste Holdings, owner of Starbucks and Domino’s Pizza franchises in South Africa, said on Friday it was abandoning the food business, and had already sold its 13 stores of the coffee chain to a consortium for 7 million rand ($464,000).
The company said it was also in discussions around the sale of Domino’s and its two other food businesses, restaurant chain Maxi’s and The Fish & Chips Co, as part of a new strategy to become a solely luxury retail group.
It had been trying to turn the Starbucks and Domino’s businesses around after putting their expansions on hold a year ago amid losses – making Taste one of a string of retail firms hurt by a troubled South African economy.
In a statement, it said that after months of canvassing potential partners and capital providers, it had become evident that the money required to fund its plan could not be secured with the current business structure and market conditions.
“Taste’s board of directors has therefore revisited the previous strategy and has decided that it is in the best interests of the Company and all stakeholders to exit the food business,” the statement said.
Consumer-focused firms from banks to retailers have been struggling in South Africa, where a stagnant or contracting economy, unemployment of near 30% and rising living costs have left many with little extra cash.
Taste said following the sale of the food assets, including the Starbucks stores and 48 Domino’s outlets, it would focus on its remaining luxury retail portfolio, including jewelers Arthur Kaplan and World’s Finest Watches. That, however, is also loss-making.
Its statement said the Starbucks outlets had been sold to a company called K2019548958 (South Africa) Proprietary Limited, a consortium whose members were not identified in full.