The Retail Food Group Limited (ASX: RFG) share price is going nuts after the company announced a Middle Eastern expansion.
RFG share price
Fresh from the sugar hit of announcing that it is expanding Donut King into Sweden, the fast casual dining heavyweight revealed today that it will expand in the Middle East.
Retail Food Group, which owns brand franchises like Donut King, Gloria Jeans, Crust Pizza, Di Bella Coffee and much more, announced partnerships with Al Hathboor Group and HKO Group to "accelerate" its expansion in the Gulf region. This will help it on its way to establishing a world class coffee enterprise.
"The joint ventures provide RFG the opportunity to grow a substantial commercial coffee enterprise throughout the MENA region, whilst enabling the Group to more efficiently service and grow Brand System franchise networks in the Gulf," Retail Food's Managing Director Andre Nell said.
Retail Food will own 50% of the joint ventures, and continue to own its current operations in the region. The company said that both partners bring complementary business operations to the table.
"Within the Middle East, there is an increasing demand for quality in terms of products and service," Al Hathboor partners' Mohammed Abdulla Al Hathboor noted. "I am confident that Retail Food Group's brands, product offering, systems, and expertise will be received very positively in the Middle East marketplace, and we are excited by the opportunity these ventures present."
It would seem Al Hathboor's expertise spans more than just food franchises. From its website:
"AI Hathboor's activities spans from electro-mechanical products to fashion and beauty products, car care products, industrial maintenance, oil field and ship stores supplies, IOL and supermarket equipments, food products and real estate, and more."
HLK Group also appears to be well connected in the Middle East.
Foolish Takeaway
Retail Food Group's local businesses have served shareholders well over the past few years, rewarding them with generous dividends and share price gains.
However, I think investors should always be a little sceptical (skeptical?) when businesses expand abroad because the failure rate is very high.
Although it is early days and Retail Food Group shares look cheap, I'm waiting for the next annual report before rushing out to buy its shares.
