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If you don’t want
fast food and an expensive full-course meal, a
fast casual restaurant may just be the ticket. Restaurants in this segment marry the quality of a casual dining environment with the convenience of fast food.
Higher food quality, a more modified table service, and greater attention to healthier food and ingredients distinguish
restaurants in this niche from its fast food counterparts.
The Pancake House Group, with its diverse brand portfolio that includes its namesake Pancake House, Teriyaki Boy, Sizzling Pepper Steak, Le Coeur de
France, Singkit,
Dencio’s, and Kabisera, knows this all too well. And its recent R800 million acquisition of the entire
Yellow Cab Pizza chain is further testament to its direction of building strong brands.
“I’ve been looking at Yellow Cab for three years,” reveals Martin P. Lorenzo, president and CEO of the Pancake House Group. “What really attracted me to it is that the brand itself is very strong,” he explains. Whereas other pizza chains are fighting it out using promos to see who gets the most customers, Lorenzo shares that Yellow Cab Pizza remains a
premium brand in that it continuously attracts “a strong
niche market of young professionals from 19 to 29 years old.”
He adds: “Yellow Cab has been in the market for 10 years, and they’ve always sold at a premium price. The brand is so strong that you don’t even have to see the yellow cab sign to know that it’s ‘Yellow Cab.’ As long as you see either the box, the
Vespa or the checkered flag, you immediately associate it with the brand.”
While most acquisitions often result in drastic changes in a company’s operations, Yellow Cab will have none of it. “We like what they’re doing,” shares Lorenzo, “because when I looked at the cash flow, the balance sheet, they were very conservative. They have no debt—very little debt; and almost all the money they made over the last years has been plowed back into the stores. Out of the 80 to 85 locations, 70 are company owned. There really are assets there.”
Fact is Yellow Cab has a lot to gain from the acquisition, too. Lorenzo reveals: “We’ll support them with the financial discipline we have, with developing locations because we have a very strong locations group, and they now have the support of our commissary. But we’re very impressed with the management team they have in place, and the discipline they apply to the Yellow Cab brand.”
With Yellow Cab beefing up the company’s portfolio of casual dining restaurants, the Pancake House Group expects to end 2011 with net sales of P3.7 billion. The group is also expecting to increase Yellow Cab’s
EBITDA (Earnings before Interest, Tax, Depreciation and Amortization) from 12 percent to 14 to 15 percent immediately.
“Just by backward integration,” puts in Lorenzo, “because now we can support them with the commissary and the sourcing. We can supply the dough using Le Coeur de France, and the sauces out of Pancake House commissary. This is effective immediately.”
http://mb.com.ph/articles/334004/niches-matter
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