Bret Thorn at Nation’s Restaurant News reports that Bain Capital, the largest shareholder of Domino’s Pizza Inc., has signed an agreement to buy the chain’s master franchisee for Japan, Higa Industries Co. Ltd.
The purchase is expected to be completed in early February, Bain said, adding that it has received committed financing for the deal from Bank of Tokyo Mitsubishi UFJ. Financial terms were not disclosed.
Higa, which operates 179 Domino’s Pizza restaurants in Japan, is a private company with three shareholders, Duskin Co. Ltd, Daiwa SMBC Capital and Ernest M. Higa, the company’s founder and chief executive and the man who introduced Domino’s to Japan in 1985.
“Under the franchise agreement with Higa Industries, Domino’s Pizza has built a strong competitive position in the pizza delivery industry in Japan by leveraging its distinctive product, high quality service and unique online marketing strategies,” said David Gross-Loh, a managing director at Bain Capital in Tokyo. “The strength of this position is evident when you consider that despite a tough environment for the restaurant industry, the company has achieved steady growth in both sales and profit in Japan over the last three years.”
Bain did not provide specifics about Domino’s recent performance in Japan.
Yuji Sugimoto, another Bain Capital managing director, said, “We believe there are significant opportunities for store growth, operational improvement, and attractive new product introductions, all of which can be aided by our knowledge of Domino’s Pizza and the resources of its global operations network.”
Tim McIntyre, spokesman for Ann Arbor, Mich.-based Domino’s, said Ernest Higa was a “pioneer” when he opened the first Domino’s in Japan.
“At the time, there was not a Japanese word to represent pepperoni,” he said, adding that Japanese customers would buy pepperoni pizza thinking it would have some sort of green or yellow pepper on it, and then return it when they saw meat on it.
“Now the Japanese word for pepperoni is ‘pepperoni’,” he said.
Bain Capital became the majority stakeholder in Domino Pizza Inc. in a private transaction in 1998. When Domino’s became a public company in 2004, Bain remained the company’s largest minority shareholder.
Bain set up shop in Tokyo in 2006 and currently has 20 operations professionals based there. It has invested in a number of companies there, including marketing and customer service firm Bellsystem24, automatic vending machine operator MEI Conlux, telecommunications company Sun Telephone, audio-visual specialist D&M Holdings, and retailer Toys “R” Us. In the United States, it is an investor in Dunkin’ Brands Inc. and Outback Steakhouse parent OSI Restaurant Partners Inc.
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