17.6.08

United Restaurants:Rs.500 crore expansion plan

United Restaurants, the owner of the US Pizza brand, will start a fast food and sandwiches chain in July as part of its Rs 500 crore expansion plan.The expansion gambit includes setting up of 100 outlets and diversification from pizzas to fast food and sandwiches.
The company will sell Indian fast food such as kathi rolls, samosas, stuffed parathas and vada pavs through takeaways in malls, railway stations and industrial complexes. The average price point of these items will be Rs 40. The company will also ship these snacks abroad. For this, it has tied up with a Swedish firm and expects to ship its first consignment of rolls and samosas to Sweden in October. United Restaurants will export out of Bangkok since Indian meat is not allowed into Sweden.
The company is also testing its first branded sandwich retail store ToastyZ in Hyderabad. The fast food project is aimed at the mass segment and ToastyZ is targeted at the high-end customers.The back-end for both the initiatives will be outsourced till the business reaches a critical mass.
The company, which was formerly known as United Pizza, has entered into a three-year agreement with Kotecha Capital, the $300 million private equity fund, for funding its expansion. Under the agreement, Kotecha Capital will have the option to buy a 49% stake in United Restaurants. Kotecha Capital had picked up about 15% in the company last year and is now willing to take its relationship with the pizza maker further till a public issue is announced in three years or so.
Sources said the company has three options of raising the fund — through internal accruals, debt or equity. However, United Restaurants prefers to raise the money through a mix of debt and equity in the ratio of 1:2 as internal accruals will be able to fund only a minuscule of the total spend, said sources.

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