guthrie serves £70m flotation
by Dominic Walsh
BRIGHTREASONS, the restaurant group set up by former Mecca Leisure boss Michael Guthrie four years ago, could double in size in the UK to at least 400 restaurants once it becomes a publicly listed company.
Mr Guthrie, who last week announced plans for a stock market flotation this autumn (subject to market conditions), expects to add at least one new brand alongside Pizzaland, Pizza Piazza and Bella Pasta, as well as franchising Pizzaland overseas.
The planned flotation should put a value of at least £70m on a group that started life in 1991 when Mr Guthrie completed a £16m leveraged buy-out of 136 Pizzaland and Pastificio outlets from Grand Metropolitan.
The flotation will enable the group to pay off debts while funding growth of an estate which has expanded to about 170 outlets following the purchase of Rank Restaurants for £20m in 1993 and the Scottish Pizza Gallery chain for £1.8m earlier this year.
The bulk of future expansion will involve Pizzaland, which Mr Guthrie wants to introduce to at least 80 more towns in the UK, and Bella Pasta, which he thinks is capable of being tripled from its present size of 38 units.
Pizza Piazza, which is aimed at a more sophisticated customer than Pizzaland, has the potential to grow by another 25 units from its current 17, according to Mr Guthrie.
As with its current estate, all new restaurants will be owned and operated by the company itself. The only plans for franchising are overseas, where commercial director Mike Ludbrook has just started investigating opportunities.
BrightReasons owns the rights to the Pizzaland name in all but a handful of countries, and expects to grant licences to a couple of territories in the next 12 months. Longer term, Bella Pasta may also be franchised abroad.
To help boost business at this crucial time, BrightReasons is to dip its toe into TV advertising in certain regions, and is currently working on a campaign with London agency GGT.
To date Pizzaland has concentrated on newspapers, where special offers and discount schemes such as "Pizza for a Penny" or "3 courses for 3p" have successfully increased the customer base.
Unlike Pizza Hut, which pours millions into advertising its home-delivery service on TV, BrightReasons has no plans to go into pizza delivery (although take-away accounts for 3% of sales).
"We're unlikely to go into the delivery market because it's very risky," Mr Guthrie explained. "We are passionately determined to be a restaurant operation where we can control the quality."
The only way it would consider tackling the delivery market, Mr Guthrie added, was by launching a new brand.
"I would not allow the Pizzaland brand to be compromised," he said.
