The Board of Fulham Shore has conditionally agreed to acquire 99 per cent of the issued share capital of Rocca Limited, the owner of the Franco Manca restaurant group .Franco Manca specialises in Neapolitan sourdough pizza and currently has ten restaurants in London. One of these restaurants, on Tottenham Court Road, is currently operated by the Company under a franchise agreement with Target.
The aggregate consideration for the Acquisition is approximately £27.5 million, to be satisfied as to approximately £6.2 million in cash and the balance of approximately £21.3 million by the issue of 193,457,975 new Ordinary Shares at 11p per share.
The Board also announces that the Company has conditionally raised a total of £4.75 million via a placing and subscription of new ordinary shares at 11p per share.
The Acquisition and Fundraising are subject to the approval of shareholders at a general meeting of the Company, to be held on 20 April 2015..
David Page, Chairman of the Company, commented:
“We’re delighted to have agreed to acquire Franco Manca, an excellent growing business. The success to date of our franchise on Tottenham Court Road encouraged the Board to pursue this acquisition. Alongside The Real Greek, we believe we are creating a portfolio of exciting and well regarded restaurant brands.
“We believe that the staff working at our restaurants are key to the success of our business. As such we intend to gift shares in the Company to a share incentive scheme, which will be used to provide each and every member of our staff with 1,500 shares in Fulham Shore.”
Franco Manca
Franco Manca has been developed from an idea by Giuseppe Mascoli, one of the Majority Vendors. The strategy has been to develop a pizza restaurant business based on a number of core values:
- to serve sourdough pizza;
- to keep the menu simple, focusing on pizza;
- to make the pizza sourdough daily in each pizzeria and prepare all food freshly every day;
- to source fresh ingredients – organic where possible – from selected local suppliers;
- to stock a small range of beverages, including beers and organic wines;
- to operate from simple, low maintenance but stylish interiors; and
- to provide good value for money: currently all Franco Manca pizzas are priced at less than £8.
In the Directors’ opinion, Franco Manca’s short, simple menu can support good restaurant margins. This has been demonstrated by the Group’s existing franchise at Tottenham Court Road which has been operating for over a year.
Franco Manca restaurants
| Location | Year of opening | Number of covers |
| Brixton Market* | 2008 | 78 |
| Chiswick | 2010 | 116 |
| Westfield Stratford | 2011 | Shared “food court” dining area |
| Northcote Road | 2012 | 90 |
| Balham | 2013 | 78 |
| Tottenham Court Road** | 2013 | 106 |
| Broadway Market | 2014 | 94 |
| Southfields | 2014 | 84 |
| South Kensington | 2014 | 68 |
| East Dulwich | 2014 | 100 |
* lease renewal discussions ongoing
** franchised restaurant, owned by the Company
Target has secured further sites at Belsize Park, Broadgate, Soho, Bermondsey Street and Ealing Broadway in London, which are currently in development and are targeted for opening in 2015. Other sites are under consideration and negotiation for openings in 2016 and beyond.
Franco Manca’s property strategy is to select small sites of between 1,000-2,000 square feet in total, typically with the capacity for about 70 covers or more. Preference is given to simple, ‘box type’ units, but any workable configuration will be considered. Franco Manca’s restaurants are currently all leasehold, but freehold premises will also be considered.
Reasons for the Acquisition
The Acquisition is in line with the strategy stated by the Company at the time of its admission to AIM and the Directors believe that it represents a major step forward in the implementation of that strategy. They further believe that, as part of the Group, Franco Manca will represent a successful, cash generative platform on which to support the further development of Fulham Shore.
Fulham Shore already owns and operates a Franco Manca restaurant on Tottenham Court Road, London, through a franchise agreement with Target, which has traded successfully since its opening in December 2013. Its performance has encouraged the Board to pursue the Acquisition.
Target has opened Franco Manca restaurants steadily since launch of the first restaurant in Brixton in 2008 and profits have increased over the last three years as more restaurants have been opened and the existing restaurants have gained more customers.
The Directors believe that Franco Manca’s current estate of ten restaurants provides a firm base on which to expand, initially in London and then, in time, elsewhere in the UK. They further believe that, supported by the Company, Franco Manca has the potential to grow to at least 40 restaurants in the UK over the next five years.
Fulham Shore trading
Trading in the period since the Company’s interim results for the half year to 28 September 2014 has met Directors’ expectations, with The Real Greek restaurants, which were acquired on 20 October 2014, performing well. The Real Greek saw a seasonal increase in turnover in the weeks running up to Christmas and trading has remained steady and in line with seasonal expectations since. The eighth The Real Greek restaurant on Berwick Street, Soho, London, opened on 5 March 2015 and a further restaurant is due to open in central London later this year. The Company’s Franco Manca restaurant on Tottenham Court Road has also continued to perform well.
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