Thai Beverage signs to buy KFC restaurants
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Thai Beverage (ThaiBev), the maker of Chang beer and SangSom rum, is expanding into the fast-food business with a deal to buy Thailand’s KFC restaurants.
ThaiBev’s agreement, covering more than 240 restaurants, is costing it about THB11.3 billion (US$340 million). It also covers stores under development, with the cost of those locations to be determined when the transaction closes.
KFC is owned by US corporation Yum! Brands, which also runs the Pizza Hut and Taco Bell chains.
ThaiBev chairman/founder Charoen Sirivadhanabhakdi has been seeking to diversify the company with a goal of generating more revenue from non-alcoholic beverages by 2020.
Thailand accounted for 2 per cent of KFC’s sales in emerging markets last quarter, and was the only region in that division to have sales drop year-over-year, posting a 2 per cent decline.
Sirivadhanabhakdi previously expanded his property business amid government measures to curb alcohol consumption in Thailand. He was ultimately forced to list the company unit in Singapore in 2006 after activists and Buddhist monks held protests to block a local share sale. The company’s long-term strategy involves generating half of its revenue from markets outside Thailand and non-alcoholic beverage. Sales outside Thailand amounted to less than 4 per cent in the last fiscal year.
Questions & Answers
Q.What is the primary reason ThaiBev is acquiring the KFC restaurants?
What is the primary reason ThaiBev is acquiring the KFC restaurants?
ThaiBev's chairman, Charoen Sirivadhanabhakdi, is aiming to diversify the company's business. He seeks to generate more revenue from non-alcoholic beverages by 2020, moving beyond its traditional alcoholic product lines.
Q.How much is ThaiBev paying for the existing KFC restaurants?
How much is ThaiBev paying for the existing KFC restaurants?
The agreement covers more than 240 restaurants and costs ThaiBev approximately THB11.3 billion, which is equivalent to US$340 million. Additional costs for stores under development will be finalised later.
Q.Was the performance of KFC in Thailand strong recently?
Was the performance of KFC in Thailand strong recently?
No, it was not. Thailand accounted for 2 per cent of KFC's sales in emerging markets last quarter and was the only region in that division to experience a sales drop, posting a 2 per cent decline year-over-year.
Q.What is ThaiBev's broader long-term business strategy?
What is ThaiBev's broader long-term business strategy?
The company's long-term strategy aims for half of its total revenue to come from markets outside Thailand and from non-alcoholic beverages. Currently, sales outside Thailand made up less than 4 per cent last fiscal year.