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Published 20 December 2012 20:55, Updated 27 December 2012 00:51
Boost Juice founds says the group’s Retail Zoo vehicle is in acquisition talks with at least six businesses. Photo: Josh Robenstone
Boost Juice parent company Retail Zoo is actively pursuing at least six potential acquisitions following the $10.6 million purchase of Cibo Expresso announced last week, co-founder Janine Allis says.
Retail Zoo is the corporate entity started by Boost’s founders designed to acquire and incubate stores that could benefit from “plugging in” to the group’s expertise and knowledge in the retail franchise segment.
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The private equity-backed company, which along with Boost Juice and Cibo owns the Salsa’s Fresh Mex Grill brand, has a “long list” of potential acquisitions and is engaged in discussions with at least six retail businesses that have a small network of stores, Allis says.
“There are a number of brands we think are a great fit we are talking about ways to work with,” she says.
The Cibo acquisition was funded with a combination of debt and equity but leaves Retail Zoo’s balance sheet in good shape to consider additional acquisitions, according to Retail Zoo chief financial officer Mark Slattery. Cibo, the South Australian coffee franchise, has 18 stores in Adelaide and two in Brisbane.
Retail Zoo is looking for companies with a strong brand and a loyal customer base that may not have the resources or systems to expand beyond their existing network.
Allis points to a partnership her company has recently formed with Chicken Central, a Victorian-based franchise with two stores in Malvern and Brighton. It has recently opened a third location in Ashburton funded in partnership with Retail Zoo.
But future deals are unlikely to be much larger than the Cibo acquisition, which Slattery confirms was bought for around $10.6 million.
Allis says the company has looked at larger deals, including one with a group boasting an 80-store franchise network, but she says a network that size is unlikely to suit the Retail Zoo acquisition model.
Slattery says Retail Zoo has been paying down debt with retained earnings in recent years and has a healthy balance sheet to facilitate acquisitions.
Retail Zoo has an annual turnover of more than $150 million with a profit of around $16 million, which Allis says in projected to increase in the next financial year by around 18 per cent.
US private equity firm Riverside Partners bought into Boost Juice in 2009 and the Retail Zoo brand was subsequently developed as part of the group’s acquisition strategy.
While the time line for PE investors to enter and exit a company is usually in the realm of three to five years, Allis says she expects the Riverside relationship to last as long as seven years.