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Net profit at Scooters Pizza owner Taste Holdings tripled as the firm gained from the economies of scale that come with owning an enlarged business.

May 4, 2007

By Tom Robbins

Cape Town – Net profit at Scooters Pizza owner Taste Holdings tripled as the firm gained from the economies of scale that come with owning an enlarged business.

Taste chief executive Carlo Gonzaga said yesterday that the franchisor had hired the required head office staff complement and was able to grow without significantly adding to costs.

On top of this, the information technology system had already been accounted for.

In its maiden set of results for the full year, the AltX-listed franchisor said profit was up 196 percent to R8.42 million in the year to February, compared with a year ago. Revenue was up 41 percent to R29.51 million.

Apart from the Scooters brand, Taste owns the casual dining brand Maxi’s.

Yesterday competitor Famous Brands, which owns the Wimpy brand, said it expected headline earnings for the year to be up by between 30 percent and 40 percent for the year to February.

The 147-store Taste business said it continued to seek a third brand and it continued to trade under a cautionary.

Gonzaga said the quick-service restaurant group was “very interested” in adding a chicken business.

He added that the firm was 19 percent owned by Nandos.

But he said the burger, casual coffee shop and even another pizza brand were possibilities. Taste would only go for a pizza business that was significantly different from the Scooters brand.

He said there were plenty of target firms with founding owners who needed additional capital to grow their businesses.

The group’s total store space increased 24 percent as it added 28 stores. The firm said it had achieved like-for-like store growth, but did not disclose this figure.

Operating margins increased from 23 percent to 37 percent as a result of the improved economies of scale.

Taste said increased access to marketing funds as a result of higher royalty payments from franchises would enable it to strengthen the brands and increase market penetration.

In line with its policy, it would not pay a dividend.