KFC may take out Nando's

Cape Town - Speculation at the weekend suggests that the SA-owned chicken eatery chain Nando's, which delisted from the JSE in April 2003, could be taken over by one of the world's biggest restaurant operators.

According to a report in the UK-based The Times, Yum Brands - the US-based owner of KFC and Pizza Hut - has held informal discussions with Capricorn Ventures International (CVI), the owner of Nando's.

While The Times played down the chances of a formal deal being struck, the rumour certainly highlights just how successful Nando's has been in consolidating a meaningful global footprint in the last six years.

While other SA fast food and restaurant operators like Spur Corporation and Famous Brands have been more circumspect in expanding their offshore presence, Nando's has aggressively expanded into a number of countries - particularly the UK.

The Times argued that Nando's, which operates in the "fast casual chicken space", would fit neatly alongside KFC, the fast-food concept formerly known as Kentucky Fried Chicken, and believed that an eventual deal could not be ruled out.

The newspaper understood Nando's had also elicited interest from Brinker International, which operates the Chili's and Romano's Macaroni Grill chains.

A source quoted by The Times said: "Nando's is the sort of scaleable concept that is bound to attract interest. But, until it has proved its worth in America, where so many have failed, it is doubtful anything will happen. For its part, Nando's should focus on getting as much advice from the likes of Yum and Brinker on how to make the US work."

Nando's made its first foray into the US market when it opened an outlet in Washington around six months ago, and has a second store scheduled for opening in the same city in the next few weeks.

When Nando's delisted from the JSE in early 2003 - offering minority shareholders 70c/share - there were mutterings around the market that investors were likely to lose the chance to participate in lucrative global roll-out.

Nando's was founded by Robbie Brozin and Fernando Duarte in 1987 with a single restaurant in Rosettenville, Johannesburg.

Two decades later Nando's has grown into the largest South African restaurant group to expand internationally with more than 750 restaurants in 26 countries - including Canada, Cyprus, United Arab Emirates, Lebanon, New Zealand, Australia, Ireland and the United Kingdom (where over 200 restaurants have opened).

Nando's operating profits are reckoned to be in the region of about $140m (R1.4bn) - a staggering figure considering that Nando's was valued at around R450m when it delisted from the JSE six years ago.

- Fin24.com