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Taste buys Zebro's Chicken for R17m

Johannesburg - The retail management group Taste Holdings has broadened its reach into the lower income market by acquiring Zebro's Chicken for R17m.

"The move will offer potential and existing Taste franchisees another investment opportunity with low start-up costs aimed at the lower income segment," Taste said in a statement issued on Wednesday.

It follows Taste's stated strategy for acquiring businesses with a significant overlap to its existing vertical integration capacity in manufacturing and distribution.

This move is complementary to its existing Fish & Chip Co. brand.

In 2012 the group acquired The Fish & Chip Co. that took Taste into the lower income living standards measure (LSM) market.

"An aggressive expansion programme has taken that brand to more than 300 franchised stores nationally and was voted the number one fish brand in South Africa in 2013 in the annual Sunday Times brand survey," said Taste.

As a South African-based management group invested in mostly franchised, category specialist, restaurant and retail brands, the Taste group is currently represented in more than 600 southern African locations through Scooter's Pizza, Maxi's, St Elmo's Woodfired Pizza, The Fish & Chip Co. and NWJ Jewellers.

Zebro's offered another brand targeting LSM 4-6 consumers and was expected to be earnings enhancing from the first year of consolidation.

The deal is effective March 1 and will be paid equally in cash and Taste shares to the sellers.

Zebro's co-founder John Hickman will remain with the company for at least a year from the effective date.

Taste established the Buon Gusto Food Services distribution business 18 months ago in a bid to maximise vertical integration and believes that Zebros would benefit from the group buying power.

This simplicity, low costs and target market made the brand accessible to a wider franchisee audience and promoted opportunities for multiple store ownership.

Taste would leverage off its existing franchisee base in aggressively expanding Zebro's nationally and internationally into southern Africa.

The brand currently has one store in Namibia and current site locations include shopping malls, rural towns, taxi ranks and selected higher LSM locations.

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