Business Irish

Monday 10 December 2018

Aryzta to settle bakery kiosk court row in US

Aryzta CEO Kevin Toland has been in charge since last year
Aryzta CEO Kevin Toland has been in charge since last year
John Mulligan

John Mulligan

Embattled baked goods group Aryzta has reached a tentative settlement in a case involving a Massachusetts firm that alleged it had been engaged by the Swiss-Irish company to help roll out thousands of in-store bakeries across the United States.

Aryzta, which owns brands including Cuisine de France, had been battling Salem-based Groom Construction since March this year.

Groom Construction claimed that it had been approached by Aryzta in February 2016 with a view to the Massachusetts firm constructing kiosks that would be used as in-store bakeries and branded under the Fornetti name. Aryzta had acquired the Hungarian Fornetti bakery business in 2015.

The rollout was to initially involve the deployment of 250 in-store bakery kiosks, with another 750 to be installed in 2017, Groom claimed.

Groom claimed that Aryzta told the Massachusetts company that in-store bakery units would be installed in 50 convenience stores in Oklahoma, and later at stores in Tampa, Florida.

Groom Construction claimed it was also informed that discussions were continuing for up to 250 kiosks to be potentially installed at Menards, a US DIY chain. Groom had told the court that it was informed that 150 kiosks could also be installed at separate locations in Arkansas and Texas.

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

Groom claimed it agreed in 2016 to manufacture 24 units.

By September 2017, Groom claimed it had not heard from the Swiss-Irish company for a number of months. Groom alleged it submitted an invoice for just over $577,000, which it insisted has not been paid, and which precipitated its legal action.

But the two sides have now reached a tentative settlement.

"The parties have reached a tentative settlement and believe in good faith that they can come to a resolution on this matter without the court's intervention," lawyers for both sides told the Massachusetts court last Friday.

Aryzta declined to comment.

The baked goods firm, headed since last September by CEO Kevin Toland, has been struggling to manage declining revenue and higher costs as it offloads assets to help reduce debt.

Shares in Aryzta plunged on Monday after an analyst at German bank Berenberg claimed the company would have to tap shareholders for cash to alleviate its debt levels.

Irish Independent

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