op $5 billion in sales this financial year, according to its US parent company. The parent company said McDonald’s 955 Australian stores are continuing to grow sales and customer counts following a revamp of its menus to provide healthier alternatives along with its traditional fare and the McCafe offering. McDonald’s sales have ramped up in the past two years in Australia and the hybrid corporate store and franchise chain expects to pass the $5 billion sales mark this calendar year. While McDonald’s is firing on all cylinders, the local division of its US compatriot, Yum Restaurants Australia, has offloaded one of its two brands to a private equity firm which may well result in a merger with the troubled Eagle Boys Pizza chain that is currently in the hands of administrators. Allegro, an Australian private equity firm, has acquired the master franchise licence for Pizza Hut Australia from its parent company, Yum! Brands, for an undisclosed price. The divestment of the Pizza Hut brand, which has struggled for sales growth and been bedevilled by franchisee disputes and issues of underpayment of employees, leaves Yum Restaurants Australia with only the KFC brand in the local market. Allegro has acquired the franchise agreement with an experienced fast food sector management team of Peter Rodwell, Lisa Ransom and Chris Leslie. Rodwell, who will be executive chairman of the Pizza Hut chain under Allegro’s ownership, and Ransom, who will be CEO, have both worked in senior roles with McDonald’s. Leslie, who has a background in finance, restaurant operations and franchising, will be chief operations officer for the venture which faces a tough battle to boost falling sales and a reported 25 per cent drop in customer numbers in the past four years. Chester Moynihan, a partner at Allegro, said the first priority for the new ownership and management will be to strengthen the network across Australia through increased investment, resources and management focus. Moynihan said Pizza Hut has been a household name in Australia since the early 1970’s and Allegro has a unique opportunity to leverage a recognised brand within a growing market segment. The acquisition has prompted speculation that Allegro may strike a deal with David Stimpson and Terrence Rose from SV Partners, the administrators of the Brisbane-based Eagle Boys Pizza. Thirteen company-owned stores have been closed by the administrators after the collapse of the company, which has debts of around $30 million. Eagle Boys Pizza was owned by a Queensland-based private equity firm, NBC Capital, which acquired the chain in 2007 from its founder, Tom Potter. NBC Capital had planned to float the chain on the ASX, but under its ownership, the store network shrank from 340 locations to just 114 standalone outlets and 12 Hoyts cinema kiosks at the time the administrators were called in last July. Domino’s Pizza has the biggest slice of the pizza market with more than 600 stores in Australia and New Zealand as well as subsidiary operations in Europe and Japan. However, Allegro could create a competitive force with around 380 stores if it was to acquire the Eagle Boys franchise network. Eagle Boys has been pared back by the administrators, but what remains could see Allegro secure at least a 15 per cent share of the pizza market if it merged the brand with Pizza Hut. A deal would also pick up platforms for international expansion established by Eagle Boys Pizza in India, Fiji and the Middle East. For Allegro, the success of its Pizza Hut investment and a possible acquisition of Eagle Boys Pizza would depend on repairing relationships with franchisees who have become increasingly discontented. Like most of the fast food sector, both Pizza Hut and the Eagle Boys franchise system have been under close scrutiny from the Fair Work Commission over under-payment of staff, particularly for delivery drivers, and regulatory issues loom as another challenge for Allegro on its current acquisition, let alone the purchase of Eagle Boys Pizza. While Allegro enters the fast food category, another private equity firm is set to exit its investment after five years. Archer Capital acquired Perth-based Quick Service Restaurant Holdings in 2011 for $450 million and is understood to be looking a listing on the Australian Securities Exchange (ASX) or a trade sale to realise around $650 million. Quick Service Restaurant Holdings has three fast food brands, Chicken Treat, Oporto and Red Rooster, and is the largest Australian owned franchised food chain with more than 620 outlets across the three brands. The company has also been expanding internationally with stores in New Zealand, China, the US and the UK. Around 75 per cent of the store network is franchised with the Red Rooster brand approaching 50 years of trading and with 375 outlets; Chicken Treat a brand with 44 years behind it and with more than 100 stores; and Oporto with 34 years trading and currently around 135 stores. The KFC brand is licenced to two major fast food companies, Yum Restaurants Australia and the Brisbane-based Collins Foods. Jack Cowin, who owns the Hungry Jacks burger chain in Australia, was the third multi-brand KFC operator until August 2013 when his Competitive Foods sold its 42 store network to Collins Foods. Cowin quit the KFC brand after a bitter dispute with Yum Restaurants Australia in 2007 over the renewal of franchise rights. At the time, Yum Restaurants Australia was pursuing what was effectively a buyback strategy for the KFC outlets and the sale of the Pizza Hut chain now raises questions over the future direction of the US business. There has been some speculation that Yum Restaurants Australia may sell the KFC master franchise rights for Australia to Collins Foods and exit the market. Collins Foods listed on the ASX in 2011 after six years under private equity ownership with Pacific Equity Partners. Collins Foods obtained the franchise rights for KFC in Queensland in 1968 and subsequently had the rights to Sizzler restaurants, which it expanded into Asia. The company struggled initially after listing on the ASX, but has found its feet in the past three years, acquiring the KFC outlets from Competitive Foods and a 50 per cent holding in the Snag Stand business. Collins Foods now has 161 KFC stores, 21 company-owned Sizzler restaurants in Australia and 65 in Asia as well as five corporate and one franchised Snag Stand outlets. In October, Collins Foods made a further foray into international markets with the acquisition of 11 KFC outlets in Germany from a subsidiary of Kentucky Fried Chicken Great Britain. Collins Foods is keen to expand its footprint in Germany in line with the KFC brands existing operators who are forecasting a doubling of the number of outlets from 140 to 300 in the next few years. Collins Foods entry into the German market follows a similar move in December 2015 by Domino’s Pizza which acquired a 212 store network from Joey’s Pizza in a joint venture with Domino’s Pizza in the UK in a deal worth $120 million. The Australian entity, which now has around 1,900 stores, owns a two thirds slice of the joint venture in Germany, which is the world’s fourth-biggest pizza market. Another fast food retailer with an appetite for expansion is the Retail Food Group, which is listed on the ASX and owns the Donut King, Brumby’s Bakeries, Michel’s Patisserie, Gloria Jeans, bb’s, Esquires Coffee, Cafe2u, Pizza Capers and Crust Gourmet Pizza brands. The multi-brand food retailer sees further acquisitions as a strategic growth platform and says it is interested in buying complementary and competitive businesses. Retail Food Group has more than 2,500 stores across 12 brands and is keen to expand further in Australia and in overseas markets through master franchise, joint venture and partnership opportunities. Retail Food Group’s retail brands are represented on five continents with 69 licenced international territories, including new licences in the past 12 months for Croatia, Iran, Fiji, Macedonia, Bulgaria, Myanmar, Slovenia, Georgia, Serbia and Montenegro.