YO! Sushi, the Mayfair Equity Partners-backed group, has further underlined its plan to create a global multi-format and multi brand sushi business, with the acquisition of Taiko Foods, the leading supplier of sushi products to the supermarket sector.
Founded in 1997, Taiko was the first manufacturer of sushi for the UK supermarket industry, and currently employs 220 people in its factory in West London and supplies Waitrose among others.
Last November, YO! acquired the 600-strong North American chain Bento Sushi in a c£60m deal. The combined businesses – YO!, Bento and Taiko - have recorded sales of approximately £200m over the last twelve months.
The acquisition will enable the continued growth of both businesses, particularly amongst UK supermarkets and other food outlets. In addition, it is expected to enable “greater purchasing power, knowledge transfer and process efficiencies across the YO! group”.
Taiko will continue to be led by its management team of Derek Lewis, managing director; Martin Prasad, operations director and Kar-Wai Chiu, finance director. It will continue to supply products under the Taiko brand.
YO! Sushi chief executive Richard Hodgson said: “We are delighted to welcome Taiko and all their team to the YO! family. This acquisition takes YO! into the next stage of its development, and further expands its global multi-format and multi brand sushi business with extensive manufacturing operations in both the UK and North America. Taiko’s proposition and its management team’s strong track record make it the ideal partner for YO! as we look to further grow our business in the UK.”
Lewis said: “This partnership presents Taiko with an incredible opportunity to grow its business. YO! and Taiko share a similar ethos and history, and we look forward to working with the YO! team and maximising opportunities to develop both businesses.”
Comment by MCA consulting editor Mark Wingett
Rewind to 20 November 2017, when the Mayfair Equity Partners-backed YO! pulled off one of the deals of the year, and one of the most surprising, when it paid c£60m to acquire the Toronto-based Bento Sushi. The deal provided the company with immediate scale in the US, with more than 600 outlets across Canada and the US, as well as the potential to develop a multi-format, multi-brand strategy with an experienced team.
It is thought at the time, that YO! would use Bento’s expertise in grab-and-go to expand its YO! To Go offer in the UK, and explore partnerships, such as Bento’s tie-ups with supermarkets, colleges and corporate dining facilities.
It was also believed that it would be the prelude to YO! moving into the branded retail market in the UK. It was understood that the YO! may look to repeat Bento’s multi-platform model in its home market – “echoing PizzaExpress’ branded supermarket listings on top of its core business”. As one source close to the Bento deal said: “Whilst it is early days in our assessment in how we will prioritise these, it is clear that there is a significant opportunity for YO! to compete in the grab-and-go, food retailing and food services space in the UK.” It’s acquisition of Taiko has rubber stamped that plan.
Seven days after the acquisition of Bento, YO! announced the appointment of Richard Hodgson, the former PizzaExpress chief executive, as its new chief executive. As I understand it, it was this move into the retail space and the chance to turn YO! into a “global, multi-channel, multi-brand Japanese food group”, which persuaded the ex-Asda, Morrisons and Waitrose, to take the job – especially as he had previously indicated his intention to return to the grocery sector after his sudden departure for PizzaExpress.
The Taiko deal further plays to his strengths, but in an uncertain time for the UK restaurant sector it also allows YO! to future proof its existing business and diversify into a fast-growing market. Us Brits spent an extra £16m on supermarket sushi last year, pushing sales through the £100m mark for the first time. According to MCA’s sister title The Grocer, value sales of chilled pre-packed sushi increased by 17.8% to £104m in 2017, making it the fastest growing main meal in food-to-go.
Sushi is benefiting from growing demand for healthy lunchtime options, with more Brits tempted to try it now it is regularly included in supermarket meal deals. Sushi is no higher in salt than most salads or sandwiches and the calorie count tends to be lower. There are also lots of veggie variants and it has more of a premium feel than a veggie salad. It’s also high in protein and a very versatile product.
Back when it was founded Taiko Foods – which claims it was the first supermarket sushi supplier launched in the UK – had limited demand for its bento boxes and California rolls. But 20 years later popularity has surged and with it sales at the London-based firm, which supplies Costco, Pret a Manger and Waitrose. It has a two-year compound annual growth rate (CAGR) of 90% according to MCA’s sister title The Grocer 2017 Fast 50, which highlights the fastest growing suppliers in the UK.
The west London-based company is believed to have launched more sushi and food-to-go products than any other UK sushi manufacturer, and is understood to particularly skilled at producing products that other manufacturers believe are too difficult to make. Waitrose was the first supermarket to sell sushi in the UK 20 years ago, and now has fresh sushi counters in most of its branches. Sales of pre-packed sushi have risen 10% year on year at Waitrose.
YO! now wants to tap into that market. It is one that Hodgson knows well, not just from his time in the grocery sector, but also from seeing up close the sales return that the retail arm of PizzaExpress delivers. The Hony Capital-backed restaurant chain sells over 35 million pizzas in UK supermarkets every year, producing over £100m in sales.
This vertically integrated model also protects YO! at a time when suppliers are coming under increasing pressure to pass on costs to their operating partners – a situation made worse by the recent problems experienced with the collapse of Conviviality, which has left both sides jumpy.
YO! currently has 97 restaurants worldwide; 81 owned and 16 franchised, serving over seven million customers a year. On the back of the Bento deal, North America will be the immediate focus for expansion – with Bento continuing to grow its traditional channels but also focussing on YO!’s model of opening landmark restaurant sites in the US. It is thought that in line with the current climate across the UK restaurant sector, YO! will only look to open a few sites here over the coming year. The Taiko deal will underline the fact it will take its foot of the pedal in terms of restaurant openings.
With the YO! Sushi’s existing international restaurant network across Europe, North America, the Middle East and Australia, the combined business is now one of the largest sushi companies outside Japan, providing an international, multi-brand, multi-format offering. As such the group is well placed to continue to benefit from the increasing consumer interest in healthy Asian cuisines and quality To-Go foods.
Therefore it looks like another canny move by Mayfair, which acquired the then Robin Rowland-led YO! at the end of 2015 in a deal valued at c£81m. Last year, Rowland said that Mayfair were “brand ambassadors, brand challengers and global citizens. They are open minded and ambitious for the brand.” They showed that ambition with the Bento deal and have backed it further with the acquisition of Taiko. Both deals challenge YO! existing model, but provides the brand with new avenues for growth through diversification. It also provides Mayfair with an arguably more attractive but certainly more varied business than it started with, something which should attract a greater range of suitors if it wishes to come to market sooner than was first thought. YO! to go indeed.
