KFC to acquire restaurants from EG Group, its largest UK and Ireland franchisee
Yum! Brands’ KFC (Kentucky Fried Chicken) division has announced that it has entered into a definitive agreement to acquire 218 KFC restaurants from EG Group, the company’s largest KFC franchisee in the UK and Ireland.
This transaction represents a significant opportunity for KFC to accelerate its growth strategy in the UK and Ireland chicken market, with high average unit volumes and robust margins said the franchisor.
KFC’s UK management team, which currently operates 50 high-performing company-owned restaurants across the UK and Ireland, will be focusing on delivering an enhanced customer experience and deploying its digital strategy to drive higher unit volumes and market share growth.
The franchisor says KFC UK and Ireland has a strong track record of consistent growth that has continued this year, with system sales up 7 per cent and same-store sales up 5 per cent across its 1,040 restaurants.
Since 2018, KFC has opened 200 new restaurants across the UK and Ireland, and has previously announced plans to open a further 500 restaurants across the market by 2030.
All of EG’s KFC UK and Ireland business – over half of which is made up of drive-throughs – and 7,800 team members will come under KFC UK and Ireland management when the acquisition is completed, which Yum! anticipates finalising by the end of the first half of 2024.
Commenting on the transaction, Sabir Sami, KFC division chief executive, said: “The KFC business is a powerhouse for Yum! globally and the UK and Ireland is one of our strongest markets. We’re now close to being a £2bn business in the UK, thanks to our extremely talented local management team. We’re pleased to add these restaurants to our equity portfolio, in a market where we are well placed to drive strong growth while also making further digital and strategic progress.”
Meg Farren, managing director of KFC UK and Ireland, added: “EG has played an important role in helping KFC expand its footprint across the UK and Ireland, and the KFC brand has been a big part of EG’s own growth in recent decades. We see a big opportunity to capitalise on our leadership position and to unlock new value for all our stakeholders in the UK and Ireland.”
Mohsin Issa and Zuber Issa, CBE co-founders and co-chief executives of EG Group, said: “We are proud to have been a strategic partner of KFC, playing an important role in helping the brand expand its footprint. Now is the right time to hand the baton to the KFC leadership team to continue to grow the brand in the UK.
“This is the latest transaction in our significant deleveraging this year – to put in place a sustainable capital structure. I would like to thank all the colleagues who have helped deliver such exceptional brand standards and customer service over recent years, including during the Covid-19 period.”
Yum! reports that the transaction will be funded from its cash flow and is expected to have an immaterial impact on its 2024 financial results. With this acquisition, Yum! sees it maintaining a highly efficient asset-light strategy including a global restaurant base that’s predominately franchisee-owned.
KFC operates over 1,000 restaurants across the UK and Ireland with 27,000 team members and reports it is close to being a £2bn business in the UK and Ireland.