Dean & DeLuca, the gourmet food brand owned by Thai property development giant Pace Development Plc, wants to beef up branch expansion at airports, mass transit systems and travel hubs worldwide with high population density, largely through franchise agreements.
Sorapoj Techakraisri, chief executive of SET-listed Pace Development, said the company is focused on granting the Dean & DeLuca franchise to potential partners that have global networks.
Sorapoj: Dean & DeLuca to go global
In August this year, Pace entered into an agreement to grant the Dean & DeLuca franchise in China to Kinghill Overseas Holding Ltd, a subsidiary of Charoen Pokphand Group.
Under the agreement, the parties have agreed to negotiation with the aim of entering into a master franchise agreement granting Kinghill and/or its affiliates the exclusive right to act as the master franchiser of Dean & DeLuca cafes and Dean & DeLuca markets in China, for the expansion of 500 stores over five years.
Kinghill has expressed interest in investing in Dean & DeLuca China and has entered into an agreement with Dean & DeLuca Asia Thailand, which directly holds a 100% stake in Dean & DeLuca China.
The framework has the option of granting Kinghill Overseas and its affiliates the purchase of up to 49% of Dean & DeLuca China, with two tranches of options divided into 30% and 19% of shares.
The prices for both tranches are subject to further negotiations between the involved parties.
Yesterday, the company reported it entered into an agreement with Lagardere Travel Retail, an operator of duty-free shops and retail stores in airports, train stations and travel hubs. The agreement grants Lagardere the exclusive right to act as the franchisee for opening and managing Dean & DeLuca stores in retail areas of airports around the world, targeting the expansion of 150 stores in five years.
The agreement calls for the opening of at least 30 Dean & DeLuca stores in 2019.
The company expects to reap about 600 million baht from this franchise grant.
Mr Sorapoj said potential franchise partners for Dean & DeLuca should be capable and have access to prime locations for stores to be established.
He said the company's experience found prime locations could produce higher sales and revenue.
Mr Sorapoj said customers at the airports, the mass transit stations and travel hubs are regarded as a very special market that is willing to spend, with relatively high purchasing power and sales are made around the clock.
"From our direct experience, for instance, a branch of Dean & DeLuca at Suvarnabhumi airport makes more than 400,000 baht per day, about 150 million baht a year. This is 4-5 times higher than the branches located in downtown Bangkok," he said.
PACE shares closed yesterday on the SET at 0.54 baht, up seven satang, in trade worth 36.3 million baht.
