JSE-listed food and jewellery management group Taste Holdings has started proceedings to liquidate its three food businesses, which only have global pizza brand Domino’s Pizza remaining after it sold its other franchising rights and/or closed stores.

This liquidation exercise would include writing off R450-million in shareholder loans, after the company was unable to find a buyer for the troubled franchising business Domino’s Pizza. 

The liquidation will affect 770 employees and 55 Taste Holdings corporate stores, which have closed from Monday.

Franchisees owning the 16 franchised outlets will, however, continue trading.

The company said it received no communication as to the date of cancellation of the franchising licence, therefore, the group retains the regional franchising licence for Domino’s until further notice.

The liquidation decision came despite the group’s extensive efforts to sell its licensing agreement for the global pizza brand, with the affected companies being Taste Food Franchising, Taste Commissary and Taste Food Trading.

Taste said its luxury division remained unaffected by the liquidations and would continue focusing on its brands – NWJ, Arthur Kaplan and World’s Finest Watches.

The group’s food brands previously included Starbucks, Domino’s, Maxi’s and The Fish & Chip Co.

CEO Duncan Crosson said in a statement on Monday that after Taste announced its revised strategy and decision to exit the food business in November, Domino’s Pizza loaned the group operating capital while management and Domino’s Pizza sought a prospective buyer for the franchising licence.

However, discussions with three master franchise partners, as well as various global suitors, finally collapsed last week, triggering the voluntary liquidation decision.

“Domino’s Pizza was extensively involved in finding a buyer for our licence and approached other franchisees in their global network as potential suitors. Both the holding company and ourselves shared the information and analysis with interested parties,” Crosson stated.

In February last year, Taste had indicated its long-term objective for Starbucks and Domino’s Pizza businesses was to achieve break-even across both international brands within 36 to 40 months after starting its expansion plans and to attain positive cash flow after capital expenditure within seven to eight years.

Management estimated it required more than R700-million, including the amount it had raised through a rights offer, to achieve a positive cash flow and had to expand the Starbucks network to between 150 and 200 outlets and Domino’s to between 220 and 280 outlets.

In November last year, Taste announced a revised strategy to exit the food business as the capital investment required could not be secured in its current business structure and existing market conditions.

Taste sold its 13 stores in the global coffee brand and the franchisor licensing agreements for Maxi’s and The Fish & Chip Co. in December last year.

The group was applying for liquidation and a liquidator to take over the food business.