Business Irish

Thursday 19 April 2018

Aryzta legal action details troubled baker's US retail expansion plan

Aryzta ceo Kevin Toland
Aryzta ceo Kevin Toland
John Mulligan

John Mulligan

Troubled baked goods firm Aryzta is being sued in the United States by kiosk-maker Groom Construction, which claims the Swiss-Irish firm intended to buy hundreds of units from the Massachusetts company as it planned to roll out 2,500 in-store bakeries under its Fornetti brand by 2020.

It's another sign of the fall-out from Aryzta's challenging position in the US, where it is under significant pressure.

Aryzta, now headed by Kevin Toland, acquired the Hungarian Fornetti bakery business in 2015. In 2016, Aryzta launched plans to introduce the Fornetti brand to the United States.

In court documents, Groom Construction said it was approached by Aryzta in February that year. It claims that Aryzta and its agent told the company that the baked goods group intended to introduce the Fornetti in-store bakeries across the United States. It would initially involve the rollout of 250 in-store bakery kiosks, with another 750 to be deployed in 2017, Groom has claimed.

In February 2016, Groom claims Aryzta and Fornetti executives agreed to hire Groom to design, manufacture and install between 250 and 700 kiosks.

Groom has claimed that Aryzta told the Massachusetts company that in-store bakery units would be installed in 50 Coulson Oil-owned convenience stores in Oklahoma in two phases, beginning in summer 2016. Coulson operates a chain called Road Runner.

That would be followed later that summer by 50 in-store units for outlets in Tampa.

Groom Construction claims it was also informed that discussions were continuing for up to 250 kiosks to be potentially installed at Menards, a US DIY chain. The company maintains it was informed that 150 kiosks could also be installed at separate locations in Arkansas and Texas.

Groom Construction contends that it was informed that it would be the exclusive partner for Aryzta and Fornetti as they eyed 2,500 kiosks by 2020.

With a contract secured to deploy 14 kiosks at Coulson stores in Arkansas, Groom claims it agreed in 2016 to manufacture 24 units.

By September 2017 - by which time Aryzta was in crisis mode - Groom claims it had not heard from the Swiss-Irish company for a number of months. Groom claims it submitted an invoice for just over $577,000, which it insists has not been paid.

Aryzta declined to comment.

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