Australia

Australia's RFT to ‘go global’ with Gloria Jean’s purchase

Gloria Jean's' Sydney outlets will now be seen as local businesses

Australia’s biggest multi-brand retail food franchiser, Retail Food Group (RFG), will become a “global franchising powerhouse” following its purchase of Gloria Jean’s Coffees at an initial cost of A$163.5m (US$144m).

Through the purchase, RFG can now boast of being Australia’s undisputed coffee heavyweight in terms of franchise brands, store counts or market share. The deal will increase the company’s outlets to 2,400 across 40 countries and will see RFG managing Gloria Jean’s 445 outlets in Australia and the United States. The remainder of the international network is operated by independent third party master franchisees. 

RFG already runs 519 coffee outlets in Australia and 183 internationally under the brands Michel's Patisserie, Esquires, BB's, Coffee Guy and Cafe2U. 

The purchase will also triple its roasting capacity with facilities in Los Angeles and Sydney, augment its roasting and wholesale coffee business to the tune of 2.9m kg throughput per year, and give the company access to Gloria Jean’s technology patents.

Long time coming

RFG's chief executive, Tony Alford, revealed his company had been eyeing Gloria Jeans for some time. "Given close alignment between Gloria Jean’s Coffees’ activities and those of RFG, the business represents a target that has long been of interest to RFG.

Indeed, RFG is of the respectful opinion that no other retail food franchise acquisition opportunity in Australia presents the scale of immediate and longer-term benefits, and in this respect is both unique and compelling.”

Gloria Jean’s Coffees genuinely transforms RFG into a global franchising powerhouse, driving outlet network population to around 2,400, and providing the company with access to numerous international markets and new revenue platforms.” 

Gloria Jean’s management retained

Nabi Saleh, executive chairman of the American chain, will remain with the business for at least a further two years, along with his executive team.

We have long known that Gloria Jean’s Coffees has extraordinary potential for growth, but we couldn’t have been more impressed by how quickly RFG recognised this potential,” Saleh said.

RFG will pay Gloria Jean's A$163.5m in cash and shares, and up to a further A$16.4m conditional upon milestones and earn-out achievements over two years.

The chain is expected to earn A$11.8m (US$10.4) before interest and tax in the 2015 financial year, and A$6.3m in profit. According to IBISWorld analysts, revenue from the coffee industry will grow by 2.8% a year over the next five years, to total A$5bn (US$4.4bn).

The Gloria Jean's brand was founded in the US in 1979 and opened its first Australian outlet at Miranda in Sydney's Sutherland Shire in 1996.

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