Aegis Brands announces the sale of Canadian specialty coffee chain Second Cup to Quebec-based restaurant franchiser Foodtastic Inc. for C$14m (US$11m)
World Coffee Portal data shows Second Cup closed net 10 stores during 2020 to operate 234 locations
In a press statement, Aegis Brands said the sale would significantly strengthen its balance sheet and enable the company to accelerate growth through new acquisitions.
Second Cup is Canada’s fourth largest branded coffee chain behind Tim Hortons, Starbucks and Country Style, with World Coffee Portal data
showing the operator closed net 10 stores during 2020 to operate 234 locations.
In response to Covid-19, Second Cup began the process of replacing many of its traditional cafés in Canada with petrol station drive thrus and other alternative store locations, including hospitals and airports.
In late-2019 The Second Cup Ltd. underwent a corporate restructure that saw the formation of renamed parent company Aegis Brands. That business subsequently acquired Canadian specialty coffee chain Bridgehead, which has 16 stores and an online retail coffee business, for US$7.1m. Aegis also operates Hemisphere Cannabis Co, a licensed cannabis retailer with four brick-and-mortar stores and an online business in Canada.
Amid ongoing Covid-19 trading pressures, Canada’s branded coffee shop market contracted by 22% in 2020 and is estimated to be valued at around C$9.5bn (US$7.5bn). World Coffee Portal forecasts the Canadian coffee shop market will return to growth in 2023.
“Second Cup has been a Canadian staple for almost 45 years and we're excited to welcome them into the Foodtastic family,” said Peter Mammas, President and CEO of Foodtastic. “We look forward to working with all our new franchisees and emerging through this pandemic with a revitalised Canadian leader in the premium coffee segment. This acquisition is consistent with our strategy of acquiring quality Canadian brands with growth potential."
Reporting annual sales of C$240m (US$181m), Quebec-based Foodtastic is the franchisor of more than 130 restaurants, including the Au Coq, La Belle et La Boeuf, Monza, Carlos & Pepe’s, Souvlaki Bar, Nickels, Rotisseries Benny, Chocolato, Big Rig and Bacaro brands.