Forum Archive Index - October 2000

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

> 
>Surely one subtle difference is that Coca Cola controls the market
>for Coca Cola worldwide whereas RBD has the rights to KFC, Pizza Hut
>and Starbucks for little old NZ only.
>
>

It isn't even that good for RBD.   There is the tiny matter of the 
'Master Franchise Agreement' and 'Development Agreement' with parent 
company in the USA 'Tricon Restaurants International'.

This, in essence, means a certain percentage of turnover must be 
returned to the parent company regardless of Restaurant 
Brand's profitability, and that there is a committment to open a 
certain number of KFC and/or Pizza Hut restaurants every year.   

These sorts of contracts are guaranteed to make money for the parent 
company, whatever happens, but might squeeze Restaurant Brands 
margins if the takeaway business gets tight.

Failure to open the number of targeted restaurants may mean that RBD 
loses the rights for KFC and Pizza Hut in this country.  I am not 
sure how the purchase of Eagle Boys affects this, although I suspect 
that from Tricon's point of view, a restaurant rebranded is as good 
as a restaurant created.  I suspect RBD might be 'off the hook' on 
the score of 'not opening enough restaurants'.

I don't know the details of the deal struck with 'Starbucks', however 
I suspect it is similar to that with 'Tricon'.   But the main plus of 
'Starbucks' I see is that it at least provides some diversification 
for the company, so that not everything is under the Tricon umbrella.
SNOOPY

disclosure: hold RBD




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