Joint Ventures In the Food Service Industry

Joint Ventures In The Food Service Industry

Joint Ventures In The Food Service Industry

Spain’s restaurants are facing many challenges as the economic crisis continues to bite, and eating out is increasingly becoming  a treat for special occasions. High-end eateries have suffered the worst, and at least six top Spanish restaurants have either closed, or announced they are on the verge of doing so, in the last two years. These include the world-famous El Bulli in Catalonia.

Smaller establishments are also feeling the pinch, and many restaurants in Madrid have signed up to special on-line deals to attract more customers. Eating out is part of Spanish tradition, and Sunday lunch in a restaurant was always in the family’s weekly budget, particularly during the economic boom. You can find a variety of restaurants on the eltenedor.es website offering up to a 50 percent discount on meals, even at weekends. And they are invariably fully-booked!

Offering cheap deals may be good for drawing in customers, but fierce competition means it is not always the best solution for a restaurant struggling to balance its books at the end of the month. So what other options are open to the food service industry?

JOINT VENTURES MAKE SENSE

A joint venture (JV) is a popular strategy with companies keen to maintain their competitive edge and can make good business sense for restaurants and catering companies.

Benefits for partners in this strategic alliance include:

  • Increased access to capital to boost existing businesses or restructure debt
  • The opportunity to expand and become a top industry player
  • The opportunity to reorganise business divisions to increase profitability

FOOD SERVICES JV SUCCESS

In April, top Spanish catering company Grupo Arturo sealed a strategic alliance with Mediterranea de Catering, which will enable Grupo Arturo to restructure its debt and boost its balance sheet. Under the terms of the agreement, business owner Arturo Fernandez will integrate his business subsidiary which mainly handles catering for companies, hospitals and schools into Mediterranea de Catering. Grupo Arturo also owns hotels, restaurants, petrol stations and sports complexes.

A new company will be formed in which Mediterranea de Catering – owned by investment fund Portobello Capital – will have a majority stake. The new firm will be a sector leader in Madrid and amongst the top three in Spain.

More of Spain’s food services companies are expected to join forces to beat the crisis.

For information on joint ventures in Spain’s food service industry, contact Argali Abogados.

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