Advantage buys China restaurants from Papa John’s

The size of the transaction was not disclosed. These restaurants were the last ones directly-owned by Papa John’s outside of the US. As of year-end 2016, there were a further 164 restaurants in China operated under franchise agreements.

The company-owned China establishments generated $13.7 million in revenue for 2017, down from $14.5 million the previous year. The pre-tax loss widened from $2.3 million to $2.9 million, resulting in Papa John’s incurring impairment charges of $1.4 million and $1.7 million, respectively.

The company had 5,199 outlets globally in 2017, of which 1,758 were in international markets. Overall revenue came to $1.78 billion in 2017, up 4.1% year-on-year, while net income was flat at $102.3 million. Over the same period, international revenue rose 11.7% to $126.3 million, comprising $35.1 million in franchise royalties and fees and $91.2 million in restaurant and commissary sales.

Commissary operations are run through quality control centers that supply food products and other items to franchisees. There is one company-owned center in Beijing, which was also earmarked for sale. It is not part of the Advantage deal.

“There is a bounty of opportunities for Papa John’s in Beijing and Tianjin,” Nam Jeongil, chairman of Asia Gourmet Holdings, Advantage’s acquisition vehicle, said in a statement. “We will apply Asia Gourmet Holding’s knowledge of the region and success with our existing restaurant concepts, such as Zheng Yi Wei, a leading chain of restaurants offering Korean cuisine, to the Papa John’s business.”

With Zheng Yi Wei, Advantage took the founder to Japan to show him what it had achieved in the restaurant space there. “We explained what we had done to help build up these companies, such as systematizing business processes and bringing people in to do restaurant design, and he said, ‘That’s what I want too,’” Emmett Thomas, head of Asia for Advantage, previously told AVCJ. “It’s an example of how our capabilities in Japan can translate to China.”  

The GP started investing outside of Japan through its fourth domestic fund, completing three deals in China: Qin Jia Yuan Media Services, Qingdao Hisense Broadband Multimedia, and ESG. All have since been exited. Papa John’s is the fifth disclosed investment from the Asia ex-Japan fund, following Zheng Yi Wei, Malaysia-based Plastic Center Group, a Taiwanese egg manufacturer, and a Shanghai-based education services provider. The latter two companies have yet to be disclosed.

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• Topics
• Greater China
• Consumer
• Buyouts
• North Asia
• China
• Advantage Partners
• Japan