Curse of the honeymoon
Taste’s mistakes were a ‘carbon copy’ of everything Grand Parade had done wrong in its rollout of US chain Burger King
With a new(ish) CEO and R132m in the bank from a February rights offer, Taste Holdings has had a busy year.
It’s been hard to keep up with management changes at the upstart food franchise business, which, despite its (loss-making) minnow status, is the SA partner to two of the world’s biggest fastfood brands — Domino’s Pizza and Starbucks.
The FM’S meeting with CEO Dylan Pienaar and former caretaker CEO Tyrone Moodley — now a nonexecutive at the company — is something of a peacepipe ceremony, given Taste’s reluctance to speak to the media last year. Pienaar, a former FD at Grand Parade Investments (GPI), says: “We had to figure out what we needed to do to Taste and [when] the press was asking us to engage with them, we knew we didn’t have the answer.”
Still, he says it was “obvious” that Taste’s strategy was broken. “There wasn’t any focus. It was just all over the show.”
For example, Taste was still grappling with its luxury goods business NWJ, trying to become the next Famous Brands with an integrated supply chain, working on the conversion of some of its local brands to Domino’s stores as well as rolling out Starbucks.
But “there was no accountability at the coalface within each of the brands”, he says. Instead, Taste had executives running shared functions across its different brands.
This led to “wrong decisions, and slow decisions”.
For Pienaar, Taste’s mistakes were a “carbon copy” of everything that GPI had done wrong in its rollout of US chain Burger King, including over-spending on stores and flying blind on store locations. He calls it the curse of the honeymoon period.
You have “queues of people, and the sales just don’t drop, they continue growing, and that can last the better part of a year, maybe even two years … and that’s where the big mistakes happen”, he says, like thinking you can spend millions on a store because you’ll “pay it back in three years”.
In fact, Taste spent just over R10m on its flagship Rosebank store in Joburg.
But the drop in sales once the novelty has gone is “brutal”, says Pienaar. “You don’t want to be around for that and that’s where I stepped in last year.”
Taste has now ring-fenced its luxury business and closed down