Restaurant Brands will not renew its Starbucks licence

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Inside Franchise Business: Starbucks will continue to operate in New Zealand under a new licenseeStarbucks and Restaurant Brands New Zealand are parting company after 20 years. Restaurant Brands has announced it will not renew its licence agreement with Starbucks Coffee International which expires in October this year.

Restaurant Brands chairmanTed van Arkel said that while the Starbucks business had provided a steady contribution to the group over a number of years, it was becoming less relevant to the company’s overall direction as it looked to further expand its core quick service restaurant brands in New Zealand and overseas.

It has sold the fixed assets and stock of its Starbucks business to Tahua Capital Limited, a New Zealand-owned company for a total price of up to $4.4 million (subject to settlement adjustments for, among other things, the value of stock on hand at completion).

The new Starbucks owners come with retail and multi-site hospitality business experience and will enter into a new licence agreement with SCI and commit to a substantial store refurbishment and store opening program. Tahua will seek to secure assignment of the leases for the 22 stores currently in the network and will also seek to employ all 300 existing Starbucks partners (employees) on the same terms and conditions as they currently enjoy as Restaurant Brands’ employees.

Restaurant Brands has agreed to provide interim support to Tahua Capital with stock management and information technology services for up to a 12-month period.

Starbucks Coffee currently contributes less than 4 per cent of Restaurant Brands’ total sales and concept EBITDA. The sale of the business will therefore have a minor adverse impact on the current year net profit (excluding non-trading items) result of approximately $1.3 million.

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