7 interesting points from the sale of Crust Pizza

There’s been many, many times where I’ve turned to Crust Gourmet Pizza Bars for their help in providing a convenient and delicious, reasonably priced dinner option (peri peri chicken anyone?).  This is probably why I took interest yesterday.  Retail Food Group made an announcement that the chain had been acquired by them, for $24m.

I posted an article on the Small Business Smarts facebook page yesterday because I liked it so much.  Why? Here’s a few reasons:

1. Have I mentioned that I particularly enjoy a Crust Pizza? It’s starting to get me wondering about what’s going to happen to my peri peri chicken Pizza… However, the founders (Michael Logos and Costa Anastasiadis) will apparently stay with the business post acquisition.  So my peri peri chicken pizza seems to be safe (at least for now) …

2. Crust Pizza appears to represent the dream of entrepreneurs in Australia – two guys act on an opportunity that existed in the increasingly unhealthy, cheap (crap) Pizza market, and worked hard to build a booming successful business.  With 116 outlets they negotiate a deal to sell worth $24m. It’s an inspiring story.

3. Based on the figures provided, Crust Pizza was bought for roughly 7 times EBIT for 2013.  In my experience, not many business owners achieve an EBIT multiple as high as 7 times EBIT! It’s a pipe dream for most really … So this is interesting…particularly if we consider this in respect of the current economic conditions.

4. “A year from settlement it will also pay an amount representing the difference between seven times the Crust EBIT less the $24 million in the initial tranche”. As reward for their commitment in staying on, Logos and Anastasiadis will be rewarded for managing Crust through a smooth initial transition.  I wonder how likely is it to achieve this reward?

5. During recent “tough times” there’s been money to be made in pizza, pastries and donuts! As Retail Food Group has experienced seven years of annual profit growth, even during the global financial crisis.  Apparently households are choosing to spend more discretionary income on cheaper food items instead of more expensive hospitality and entertainment options. All up, this gives RFG 1,350 outlets across its divisions including Donut King, Brumby’s Bakery, Michel’s Patisserie, Esquires Coffee Houses and Pizza Capers.  Hmmm … I wonder how the health statistics are looking?

6. RFG is experiencing the benefits of strategically managing for business growth and profit drivers.  RFG knows where the business is at now – “low-cost offerings” and how they want to expand the business – “high ATV (average transaction value) lunch and evening meal time opportunities”.  There’s “take-away” value for all business owners here! Where’s your business at now, where do you want it to be, and what’s the plan to get there?!

7. Finally, and I’m not going to apologise, I just love seeing the numbers.  Especially when they’re this positive.  Adjusted revenue for RFG increased 20.3% to $100.6 million, while EBIT reached $47.5 million for this year. Net profit after tax reached $28.5 million.  That’s 28% net profit after tax people! A goal most small business owners would aspire to achieve!

What are your thoughts? peri peri chicken pizza anyone?! 🙂

 

The material and contents provided in this blog are of an informative nature only.  It is not intended to be advice and you should not act specifically on the basis of this information alone.

The original article was “Retail Food Group posts record profit, swallows former Smart50 entrant Crust Pizza for $24 million”.Thursday, 23 August 2012 11:32 Patrick Stafford on http://www.smartcompany.com.au.

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