Al Masah Capital buys owner of Johnny Rockets franchise in UAE and Oman

The Dubai-based private equity firm Al Masah Capital has acquired Al Faris Restaurant, which owns the Johnny Rockets franchise in the UAE and Oman.

The move yesterday is further evidence that the appetite for mergers and acquisitions in the UAE’s food and beverages sector is growing.

This follows close on the heels of two other deals. The retailer Marka last month purchased the home-grown restaurant chain Reem Al Bawadi for Dh315 million, and this month, Audacia Capital, a Dubai-based investment bank, bought a 30 per cent stake in Al Safadi Restaurants.

Al Masah’s food and beverage arm, Diamond Lifestyle, acquired the UAE-based operator of the Johnny Rockets burger chain.

Diamond Lifestyle declined to give the value of the deal but said it expects to invest $150 million in the sector over the next three years.

The California-based Johnny Rockets entered the UAE in 1996 with an outlet in Jumeirah. Today, it has eight restaurants in Dubai, four in Abu Dhabi and two in Ras Al Khaimah, with a capacity to cater to 1,100 people at any one time.

The chain has more than 120 restaurants outside the US, and expects to double the figure by 2017.

“We look forward to expanding the Johnny Rockets footprint in the UAE and Oman,” said Amitava Ghosal, a partner at Al Masah Capital and director of Diamond Lifestyle.

“We have seen the appetite for food and beverage deals strengthen in the past two quarters, a trend expected to continue for the foreseeable future,” said Simi Nehra, the head of mergers and acquisitions for the consultancy KPMG.

“One key factor is that currently food and beverage brand aggregators, who bring international brands to the UAE, are finding it more and more challenging to introduce new unique concepts to the region, hence growth for existing food and beverage operations must come organically or through mergers and acquisitions.”

In the Middle East and North Africa region, mergers and acquisitions are expected to grow 10 per cent this year despite the decline in oil prices, according to the consultancy EY. A majority of such transactions are expected to take place in sectors such as food and beverages.

Abu Dhabi-based Gulf Capital expects to complete four to six acquisitions this year in the healthcare, retail, food and education sectors.

In February, the German e-commerce company Rocket Internet acquired the Kuwait-based online food delivery services provider Talabat for €150m (Dh618.3m). Another online food delivery player, Foodpanda, in which Rocket Internet has an investment, acquired UAE-based for an undisclosed amount.

Dubai is expected to attract 8 per cent more tourists, reaching 14.3 million international visitors this year, making it the fourth most popular destination in the world among 132 cities, according to a MasterCard Global Destination Cities Index, released this month.

Another 1,600 food and beverage outlets could open by 2019 in the UAE and the sector will grow an average of 4 per cent annually over the next four years, according to a report from KPMG also this month.

About 66 per cent people are estimated to eat dinner out at least once during the week, spending about Dh120 per person, it said.

Among popular outlets are casual dining restaurants, fast food and food courts, the KPMG report added.

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