Restaurant franchisor Famous Brands has acquired a controlling 75% stake in Cater Chain Food Services, a local business distributing primarily red meat products to customers across South African and into certain markets in Africa. 

Established in 2004, Cater Chain supplies beef, lamb, mutton, chicken, bacon and ham to the food services market from a 15 900 m² production facility located in City Deep, in Johannesburg, which boasts processing equipment and significant freezer and chiller capacity.   

The plant, which consists of separate Halaal and non-Halaal facilities, produces in the order of 900 t a month.

Famous Brands Group CEO Kevin Hedderwick said on Monday that the acquisition further underpinned the group’s strategy to establish itself as a total food service solutions company.

“Our vertically integrated business model, comprising our branded food service franchising division supported by our manufacturing and logistics divisions, is a key strategic advantage, and our steadfast mission over recent years has been to build capability across all three pillars of the business,” he outlined.

Hedderwick added that the acquisition appealed to Famous Brands for several reasons, including the fact that it offered the opportunity to integrate currently outsourced business into the facility at a relatively low cost of entry.

It also allowed the company to derive an immediate income stream rather than constructing a purpose-built facility, which would entail higher set-up costs and a three- to four-year lead-time before synergies could be leveraged through the business.

“In addition, the facility will provide additional storage capacity in terms of our bulk beef requirements. Operating on a five-day week, single-shift system, the capacity to take on additional business is significant,” Hedderwick stated.

Cater Chain founders Roy Tem-Tem and John Tem-Tem outlined that the company’s partnership with Famous Brands would enable it to unlock its full potential.

“Having been in the industry for over 30 years, we understand that change is required for a business to grow and we look forward to embracing these changes and the benefits that will accrue to Cater Chain as a result.

“Through this new venture, Cater Chain will profit from Famous Brands’ proven business model and the quality and scale of its customer base. In turn, we will contribute a committed and experienced management team and an accredited modern facility with extensive production capacity,” the siblings commented.

Famous Brands noted that the purchase consideration of the deal fell below the threshold of a categorised transaction in terms of the listings requirements of the JSE and would be settled from cash reserves.

The transaction remained subject to Competition Commission approval and, pending fulfilment of this condition, the effective date would be the first day of the month following the month in which all the conditions precedent had been fulfilled.

Cater Chain’s senior management team would be retained, thereby facilitating what Famous Brands believed would be a “seamless integration” of the business into its operations.