Aussie chicken icon sold for ‘$500m’

THREE of Australia's most iconic and popular chicken chains have been sold for an eye-watering sum.

Red Rooster, Oporto and Chicken Treat - which are all owned by leading private equity firm Archer Capital - have been snapped up by PAG Asia Capital, one of Asia's leading investment firms.

The takeaway staples, which all operate under parent company Craveable Brands, were sold in a deal "valued at about $500 million", according to Smart Company.

Archer Capital managing partner Peter Gold told news.com.au he couldn't confirm the exact sale price due to "legal confidentiality obligations", although he said the $500 million figure published by various news outlets was "in the right sort of ballpark".

He said it was now up to PAG to comment on the future of the chains, although "my guess is there will be no change" for chicken fans.

Chicken Treat was born in 1976 in Western Australia. Picture: Supplied
Chicken Treat was born in 1976 in Western Australia. Picture: Supplied

"They want to see the business grow and expand. I'm sure they've thought about what they would like to do, but it's all about growth and should be good for consumers," he said.

Mr Gold said PAG had the "international experience" and capital to "expand", and it had been the "right thing for the business to see if a sale could be facilitated", although he noted it wasn't a "typical sale process".

He said the firm was generally focused on a "medium term horizon" of between five and 10 years, and the sale came after Archer Capital was the major owner for eight years.

"When we move through that time period, we come to the point when we have executed most of our strategy and we start to think about liquidity options," he said.

"In this case we hadn't really come to the full course, but the PAG guys approached us and we consider it a good result for the business."

Mr Gold said Archer Capital had not been looking to sell up when it was approached by PAG, and the deal was not linked to any scandals affecting Australia's franchising sector.

However, Craveable was under scrutiny during the recent Senate inquiry into the operation and effectiveness of the Franchising Code of Conduct.

There are 359 Red Rooster stores in Australia today. Picture: Supplied
There are 359 Red Rooster stores in Australia today. Picture: Supplied

Last May, news.com.au reported a number of Red Rooster, Oporto and Chicken Treat franchisees were on the verge of collapse and facing bankruptcy, with owners blaming Craveable for their woes.

In a submission to the Senate inquiry, a group of chicken shop franchisees claimed their businesses were struggling due to the "poor business model" imposed by the parent company, and the high costs of the franchises had led to stores closing down.

"There are many more on the verge of bankruptcy," the group said.

"The business model needs to be questioned and rectified prior to more franchisees becoming bankrupt."

Last year, chief executive Brett Houldin denied the franchisees' claims and slammed them as "ridiculous".

But in a further blow, in January this year footage emerged of a rat infestation at Oporto's popular Broadway store in Sydney.

The clip was posted on Facebook and soon went viral, prompting the store's closure.

However, Craveable Brands claimed Oporto stores "maintain rigorously high sanitation standards" and it was a "one-off situation" caused by "external construction activity in the Broadway area".

Archer Capital acquired Craveable Brands in 2011. It is the largest Australian-owned operator of quick service restaurants with 576 stores across Australia and New Zealand under the Red Rooster, Oporto and Chicken Treat brands, including 359 Red Rooster stores, 159 Oporto outlets and 58 Chicken Treats.

In a statement sent to news.com.au, PAG chairman and CEO Weijian Shan said he believed there were "great opportunities" for Craveable and that he looked forward to "working with management on the next stage of portfolio innovation".

"PAG has a long track record of successful partnerships with established brands and franchisee networks, notably in our work with The Cheesecake Shop, and we look forward to supporting Craveable's high quality and dedicated franchisees as they grow their business," he said.

PAG acquired The Cheesecake Shop in 2017.

It is believed the company is now planning on expanding the chains overseas, although Craveable already has outlets in New Zealand, Singapore and Sri Lanka, with more set to open in Vietnam and the Middle East soon.

Continue the conversation @carey_alexis | alexis.carey@news.com.au



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