Gold Brands share falls on CDG deal

Gold Brands’s share price tumbled 9% in intraday trade on Monday following an announcement by the company that it had secured a franchising deal with Casual Dining Group (CDG).

Gold Brands’ share price tumbled 9% in intraday trade on Monday following an announcement by the company that it had secured a franchising deal with UK-based Casual Dining Group (CDG).

The move comes at a time when consumers remain under pressure and are moving their spend to essentials. As a result, the restaurant market has become highly competitive and the only stores that are doing well in this category are those with niche offerings — as seen from Statistics SA data.

The Alt-X listed investment house said it would pay about R829,000 to introduce CDG’s brands Bella Italia, Café Rouge, Las Iguanas and Belgo exclusively into SA, with the first store scheduled to open during the course of 2017. A minimum of 20 restaurants would be opened across the country in the next five years, the company said.

Gold Brands said the deal would offer customers unique and authentic brands with unbeatable value. It said the CDG brands would also give the company exposure to higher income customer segments.

“We believe that this partnership with CDG will deliver on a real need in the South African market where customers want new, interesting and exciting dining experiences,” said Gold Brands CEO Praxia Nathanael.

Gold Brands is the owner of 1+1 Pizza, Opa!Pitaland, Chesanyama, Chicken Wild Wings and Blacksteer.

Nathanael said the deal with CDG followed the consolidation of the Chesanyama store base, which would help the company to enhance the quality of its franchise network.

“With this process in place, combined with CDG’s proven concepts, we see exciting growth opportunities for the company,” he said.

Gold Brands listed on the Alt-X a year ago at a price of R2. Shares are currently trading at 75c, valuing the company at about R85m.