Famous Brands goes (almost) vegan
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Famous Brands is on the acquisition trail again. Sometimes this works rather well and other times it becomes a complete disaster, like the small mistake of Wakaberry (remember that?) and the very large mistake of Gourmet Burger Kitchen.
The company (and especially shareholders) will hope that a plant-based lifestyle will be kinder to Famous Brands than hyped-up frozen yoghurt or burgers in faraway lands. The company has acquired 51% of Lexi’s Healthy Eatery, a full-service restaurant business offering a plant-based experience across breakfast, lunch and dinner. Lexi’s described itself as being a mostly vegan, whole-food restaurant.
Lexi’s includes a central kitchen which develops and produces meals for the restaurants and retails a limited convenience range to supermarkets. This is the wholesale part of the business, which is similar to the Famous Brands business model.
There’s a very important point here: full-service restaurants aren’t as easy to scale as take-away formats. Just consider the likes of Steers vs. tashas, with the latter moving out of the Famous Brands group in 2020 after the parties acknowledged that there wasn’t a strategic fit. Famous Brands has done very well out of take-away formats but scaling the Signature Brands division isn’t so easy.
Notably, the announcement puts forward a view that the brand can be expanded into a quick-service restaurant format. If Famous Brands can get this right, it might prove to be a successful acquisition. After all, this acquisition is firmly on-trend as consumer tastes have shifted significantly towards plant-based eating.
There are only four restaurants in the group, of which one is franchised. Clearly, these are early days for the Lexi’s brand. The deal is for the franchise and central kitchen operations, so I interpret that to mean that the three company-owned restaurants are excluded from the deal.
To be fair, RocoMamas was also in its infancy when Spur Corporation acquired it. That has been a spectacular acquisition, with a national rollout of a format that has resonated with customers.
This is an interesting deal and I’ll watch with interest to see whether Lexi’s can be successfully scaled.
