September 22, 2020

This is the Mexican giant that has eaten the VIPS restaurants | Economy

This is the Mexican giant that has eaten the VIPS restaurants | Economy

The Christmas shopping has been advanced a couple of months in Alsea. The Mexican restoration giant has pulled a checkbook to take over two bastions of restoration in Europe: 260 Starbucks establishments in France, the Netherlands, Belgium and Luxembourg and all the VIPS group restaurants in Spain. A movement of draft of a firm that already operates all the Starbucks, Domino's Pizza, Chili's, California Pizza Kitchen, P.F. Chang's, Pei Wei, Italianni's, El Portón, The Cheesecake Factory and VIPS of Mexico, and that now looks at the heart of the Old Continent to diversify its sources of income and achieve a natural currency hedge, before the vicissitudes of the weight and the intrinsic strength that offers the euro

The name Alsea may not sound much like Spaniards, Argentines, Chileans, Colombians and Uruguayans, but surely a number of them have left money in their coffers without even knowing it. The Mexican company already operates all the Foster's Hollywood hamburgers, the Cañas and Tapas or the La Vaca Argentina restaurants in Spain -More than 560 units in total- and all the Starbucks of Argentina, Chile, Colombia and Uruguay. Now, with his new adventure, he takes another step in his strategy of focusing on solid markets to "compensate for the income he receives in Latin American currencies, which are much more volatile," explains Verónica Uribe, an analyst at Monex Casa de Bolsa. According to the calculations of Antonio Hernández, of Barclays in Mexico, Europe (mainly Spain) will go from supposing the fifth part of Alsea's income statement to just over a third, which will dilute the weight of the market that offers the most margins, Mexico, from 55% to 45%.

Your most profitable market loses weight, yes, but with a clear objective: to reduce risks. "The operation sounds reasonable and reinforces our theory that the company is looking for more exposure to more stable areas," says Hernández. "It looks for more acquisitions in mature markets at a time when exposure in Latin America, especially in Argentina, is not as favorable for the exchange rate as for inflation, with an average consumer that is not resilient, which has reduced its consumption. in restaurants. " Before this second phase of Alsea's European adventure, its exposure to Argentina was around 8%, "but it caused noise in the market and now it is going to dilute more," he adds.

Another positive face of the acquisitions of VIPS (valued at 500 million euros) and Starbucks – both still pending from the Spanish competition authorities and the European Union, respectively – is the increase in the gross operating result – which will grow 13% according to the calculations of the second Mexican bank, Citibanamex- and the synergies that these contribute on the European businesses that it manages today. The refusal is the increase of its debt and that last June was over 1,300 million euros, which has not stopped growing in recent years. "However," says Uribe, of Monex, "and despite the foreseeable increase in net debt, the company has shown in the past that it can continue to grow."

Alsea, which will celebrate its investor's day next week, has not broken down the assumed indebtedness, but the market speculates that a good part of the financial obligations acquired to acquire VIPS (until now controlled by the Mexican company Plácido Arango) will be in euros . A strategy that makes sense, given the interest rate differential between Mexico (around 8%) and the euro zone (still at zero): any purchase financed in pesos would be subject to the first rate, while both the of Starbucks in France and the Benelux as that of Vips in Spain will be done, presumably, with a much lower interest. It is one of the advantages of going shopping in a continent in which the price of money continues without taking off.

In 2017, the Mexican giant achieved a net profit of 1,252 million pesos (almost 55 million euros at the current rate), 11% more than a year earlier. Although ballasted by inflation, which has given a good dent to the purchasing power of Mexicans in the last two years, Alsea is still on track in 2018. In the third quarter saw its profits grow by almost 40%, driven by the strict control of costs and improvement of sales.

Spanish reconversion

A little less than a year ago, the business of VIPS Spain consummated the turn that its faithful already had been thinking for some time: announced the definitive closing of its stores -that so many people in Madrid got out of the hassle of an unexpected or forgotten gift, or simply of a late purchase when the Chinese did not yet exist-. Two decades ago, VIPS had pioneered its concept of convenience store open until late in the morning, Sundays and holidays included. The turn is clear: goodbye to stores, hello to new restaurants. And the strategy fits like a finger in the hands of its new owner, 100% focused on restoration.

In 2017, the VIPS group -became in the process of expansion, with 76 new openings, three times more than a year before- increased its gross operating profit (EBITDA) by 8.4%, until it surpassed the 30 million mark. of euros, just over two million above 2016. The net result, on the other hand, was negative at 11.7 million for the closings of the stores that still had in operation, the restaurants The Wok and the last Rugantino. Although very modestly, VIPS Spain had won money the previous year, 2016: just over 100,000 euros. The VIPS brand, of Mexican origin, was already an old name for Alsea. In 2014, it was added to its menu in Mexico and today it operates almost 300 restaurants throughout the country, after having renewed a good deal in recent years. With the incorporation of the brand in Spain closes the circle: when a consumer between hungry in any VIPS of the planet, will be swelling the accounts of the Mexican giant.


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