China's Hony Capital targets food outlets expansion, starting in UK

Pizza Express owner Hony Capital, one of China's biggest private equity firms, said it aims to boost its global network of retail food outlets to more than 10,000 over
the next decade from about 850 now in a bid to be a top world food and beverages player.

Operating through its Hong Kong catering and retail arm Best Food Holding (1488.HK), Hony Capital will kick-off its hospitality expansion by launching one of its Chinese cuisine outlet brands in London by year end, managing director Bruce Wang told Reuters in an interview.

"When we were working on the takeover of PizzaExpress in Britain, we struggled to find a nice Chinese restaurant at the time. Given the large Chinese population residing there and lack of authentic Chinese food chains, it's a huge opportunity for us," said Wang.

Hong Kong-based Best Food, which currently has over 150 stores in mainland China, will open new outlets of its Beijing Hehegu fast food chain in London's business districts with a localised menu that should also be palatable for Western customers, he said.

"If Beijing Hehegu can make a success in the U.K., other Best Food's Chinese cuisine brands will certainly follow the lead," Wang said.

Hony Capital's food and beverages global growth push comes at a time when the restaurant industry is seeing intense competition that has hurt sales at giants such as McDonald's Corp (MCD.N).

Wang did not comment on the investment needed for Hony Capital's growth plan or how it will be financed but said funding won't be a hurdle to its ambitions.

Hony, which has $10 billion under management and is backed by Legend Holdings Corp (3396.HK) - parent of personal computer maker Lenovo Group Ltd (0992.HK) - bought PizzaExpress for about 900 million pounds in 2014.

It plans to boost the British restaurant's numbers in mainland China to more than 200 by 2021 from the current 35, Wang said.

He added Best Food hoped to leverage PizzaExpress's distribution network and client base in Britain, where it has nearly 500 restaurants - although the company would have to overcome global concerns over Chinese food safety standards following a series of scandals in the country.

Wang said Best Food will try to source more than 50 percent of its ingredients locally and continue to team up with large Chinese suppliers to ensure food safety.

Hony's founder John Zhao told Reuters in February that the private equity firm would continue to scout for acquisition targets abroad - including in the United States - to further its expansion, while looking for investment targets closer to home.

Late last year Hony was a lead investor in a $11.5 million fundraising round by Chinese burger franchise Xishaoye Roujiamo which is also looking to enter the British market.

Reuters*

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