Who will buy Pie Face?
Embattled bakery franchise Pie Face is heading towards profitability after a tumultuous few years, with a sale just weeks away.
“We are currently involved with seven or eight titles in the due diligence process,” said Liam Bailey, partner at insolvency firm O’Brien Palmer and receiver of Pie Face trading entities.
He also confirmed that those expressions of interest included parties from the franchisor and hospitality communities.
Pie Face is likely to be sold by the start of February with the sale process estimated to be completed in early March.
However, many creditors are unlikely to receive payment out of the receivership.
Secured debt is estimated to be $4 million and unsecured debt is under $5 million with employees owed more than $1 million.
This is not the first attempt to get the brand back on track.
So what’s different this time?
Bailey said that O’Brien Palmer implemented “much needed business reform” on 31 October 2016.
Changes included implementing a reactive supply chain, which involves a focus on day-to-day processes, appointment of new senior management with practical experience, closing down loss making stores and carrying out staff cuts to reduce labour costs.
He explained that while the last few years involved “buying time” for debt relief, Pie Face has now been freed up to trade profitably.
Bailey also said the franchise model has been in the business of converting profitable stores into franchisees. The expressions of interest have been based on the idea of “no interruption to franchise agreements”.
Whether the purchaser will grow the franchise network immediately or maintain several company-owned stores is yet to be seen, but Bailey said that there is an interest to grow the brand in Australia and internationally via licence agreements in Indonesia and Malaysia.
“We were very much taken aback by the level of interest in the business notwithstanding the bad press it had received over the years,” he said in a report by Fairfax Media.
“There’s a lot of recognition of the growth potential, if properly managed.”
This article first appeared on sister site, Inside Franchise Business.
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