SuperValu owner appetite for family restaurant expansion
Musgrave Group is eyeing the acquisition or creation of a mid-market restaurant chain in Ireland to cement its position as a major player at every level of the food service industry.
CEO Chris Martin told the Irish Independent that the group behind retailer SuperValu, Centra and the Marketplace wholesaling business, is interested in operating its own restaurant chain.
In the UK, chains such as Carluccio's, Jamie's Italian and Byron are struggling amid rising costs and intense competition, but the sector is almost unconsolidated here, with a scattering of international brands like Milano and Wagamama and relatively small domestic chains like Avoca Cafes - now owned by Aramark - Dunne & Crescenzi and Brambles Cafes.
"There is an opportunity here (in the mid-market restaurant segment). We are open to acquisitions if the right one comes along," Musgrave CEO Chris Martin told the Irish Independent.
It's understood however that no specific deal targets are in sight and plans are not an advanced stage.
If its doesn't buy, Musgrave Group has the option of developing its own brand from scratch, he said.
The group's relatively new Frank & Honest coffee bar chain, rolled out in SuperValu and Centra outlets is already Ireland's biggest coffee brand, Mr Martin said.
Its Moo'd Ice-cream brand is now in 60 Centra and SuperValu outlets. The group is also rolling out Chip Mongers in partnership with independent fast food outlets.
A shift into owned or franchised restaurants would aim to build on Musgrave's acquisition of La Rousse Foods from Aryzta.
The La Rousse wholesale business sells fresh, frozen and ambient fine food and plugs Musgraves into hotels, restaurants and catering firms.
Aryzta had originally acquired the company founded by chef Marc Amand, who had previously worked at the high-end Patrick Guilbaud restaurant in Dublin.
Musgraves can bring skills in social media, sourcing and brand design to its businesses and partnerships, Mr Martin said. The so-called 'out of home' food service segment, including mid-priced restaurants is tipped for significant growth in Ireland, driven by rising wealth, cash-rich/time-poor consumers and changing demographics,
However, it is a tough market to crack.
In the UK, a plethora of branded restaurants are struggling to survive amid intense competition and a squeeze on real incomes in the wake of the Brexit vote.
The well-established Carluccio's Italian-themed chain this month unveiled a restructuring plan that will likely lead to 34 restaurant closures from among its 103 restaurants in the UK and is seeking approval from landlords to slash rents in a restructuring plan known as a Company Voluntary Agreement (CVA).
Other UK restaurant chains that have undertaken CVAs so far this year include Byron, Prezzo and celebrity chef Jamie Oliver's Jamie's Italian.
Earlier this week, family owned and Cork-headquartered Musgrave Group announced pre-tax profit of €80m in the year to December 30, on sales of €3.7bn.
Profits were up 9pc on 2016, the third year in a row of profitability, and the business was sitting on net cash of €71m and net assets of €330m at year-end.