Retail Food Group acquires Gloria Jean’s Coffee for $163 million

Australia’s multi-brand food franchisor Retail Food Group (RFG) has acquired the Gloria Jean’s Coffee chain for $163.5 million, in a sale that positions them as one of Australia’s biggest coffee players in the market. According to a statement released by RFG on 24 October, the purchase includes the intellectual property rights to the Gloria Jean's Coffees, ‘It's a Grind’ brand systems, and wholesale coffee roasting operations in Australia and the United States. RFL already runs 519 coffee outlets in Australia and 183 internationally under the brands Michel's Patisserie, Esquires, BB's, Coffee Guy and Cafe2U. The new acquisitions means that RFG will manage 800 franchised outlets across 40 countries, expanding the RFG outlet population total to 2400. This includes 358 Gloria Jean’s Coffee outlets domestically and 420 around the world. “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,” says RFG CEO Tony Alford, in the statement. “RFG is of the respectful opinion that no other retail food franchise acquisition opportunity in Australia presents the scale of immediate and long-term benefits, and in this respect is both unique and compelling.” Tony says the acquisition of of Gloria Jean’s Coffees will transform RFG into a global franchising powerhouse, and provide the company with access to numerous international markets and new revenue platforms. The company is already a significant wholesale coffee roaster, supplying existing Brand Systems and third party accounts under the Evolution Coffee Roasters Group, Caffe Coffee, Roasted Addiqtion and Barista’s Choice coffee brands. “RFG already maintains a significant wholesale coffee roasting business, whose through-put will increase three-fold to 4.5million kilograms when combined with that of the target’s,” says Tony. The coffee chain is expected to make $11.8 million in earnings before interest and tax in the 2015 financial year, and $6.3 million in profit. Gloria Jean’s Coffees Executive Chairman, Nabi Saleh, has committed to remain with the business for a minimum two years post completion, in addition to senior management and support staff. “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,” says Nabi. In the statement, RFG says the acquisition also offers further access to the closed patented Caffitaly capsule delivery system, which currently holds 540,000 machines within the Australian market.
Settlement of the transaction is programed for December 2014.