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Retail Food Group (ASX: RFG) has acquired boutique coffee franchise CIBO Espresso for $2.7 million in a move that the Gold Coast-based company is aiming to provide a bigger footprint in the South Australian market for its Gloria Jeans network.
The acquisition from Retail Zoo will bring 22 CIBO Espresso locations, which includes four company-owned outlets, into the RFG stable with a plan to transition the stores into Gloria Jeans outlets.
RFG plans to spend an additional $1.3 million to “provide compelling incentives” for CIBO Espresso franchisees to make the transition.
CIBO Espresso was founded in Adelaide 23 years ago by Roberto Cardone, Salvatore Pepe, Angelo Inglese and Claudio Ferraro who created the business by leveraging the popularity of their CIBO Ristorante in North Adelaide.
The brand was established to provide an “authentic Italian coffee bar experience” by specialising in espresso coffee, gelati and complementary foods.
RFG says the acquisition will deliver “immediate scale in South Australian market” allowing the company to “efficiently support the combined outlets”.
“This acquisition aligns perfectly with our strategic goal to grow our core brands in the Café, Coffee, Bakery (CCB) channel and is an important step to deliver Gloria Jean's bold ambition to become the most visited beverage destination in the world,” says Retail Food Group CEO Matt Marshall.
Gloria Jeans currently has six stores in South Australia generating sales of $5 million a year, while the CIBO Espresso network has annual sales of $20 million from its 22 stores.
RFG says the additional $1.3 million investment planned for CIBO Espresso is aimed at providing franchisees incentives to come under the Gloria Jeans banner including capital expenditure for rebranding and new equipment to drive business growth.
RFG, which also owns the Donut King, Brumby’s, Crust and Beefy’s franchise businesses, is targeting EBITDA synergies of between $1.2 million and $1.8 million in FY26 following the acquisition.
The synergies are expected to be realised by RFG using its Castle Hill roastery’s production capacity to supply the franchisees.
The deal is due to settle in mid-FY25 with RFG adding that there will be no material contribution to company results in the current financial year after transaction costs of $200,000 to $300,000 and the planned conversion incentives.
RFG says the CIBO Espresso acquisition is being funded from existing cash reserves.
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