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Vapiano CEO sees potential to grow number of restaurants to 900
[MUNICH] Vapiano SE, the German restaurant chain that sold shares to the public in June, isn't stopping with its goal to operate 330 outlets profitably in 2020.
"In our core markets of Europe and in the Middle East and South America, we see a market potential of 800 to 900 restaurants in the long-term," Chief Executive Officer Jochen Halfmann said in an interview. "That means that even beyond 2020 we still have several years of strong growth ahead of us." That's not taking into account potential plans to expand further afield. The company hasn't yet made a "binding decision" on an expansion in China and the US, Mr Halfmann said.
Vapiano, known for its hallmark outlets that offer freshly prepared pizza and pasta dishes as you wait, is in the process of setting up three new restaurants in London, Miami and Doha to open in early 2018. One may even start up this year, Mr Halfmann said. Opening 28 restaurants this year would take the total to 206 restaurants, the CEO said.
Co-founded by Hamburg entrepreneur Gregor Gerlach in 2002, Vapiano's free float now stands at 29.6 per cent. The stock has failed to inspire since the IPO, closing on Wednesday 3.5 per cent lower than the issue price of 23 euros. Yet analysts remain bullish, with four of five brokerages that cover the stock applying buy ratings, according to data compiled by Bloomberg. Another recommends holding the shares, while none says sell.
With a 12-month average target price of 25.34 euros, the stock has upside of about 14 per cent.
Aside from the three restaurants in London, Miami and Doha, management plans to open 30 to 35 new restaurants next year. "We prefer to grow organically and, if necessary, rely on joint ventures and franchises to enter additional markets," Mr Halfmann said.
Moving into the take-away business is also a focus, he said. By the end of this year, around 35 per cent of Vapiano's restaurants will offer take-outs. In 2018, it wants to expand the offer to 75 per cent of its outlets.
Smaller "Mini Vapianos" are also a consideration, though this might require extra funding, the CEO said. "Should we open up an additional expansion avenue, for example with the Mini Vapiano concept, financing needs could change and the management and supervisory boards would reassess the current financing position." The Bonn-based company is currently testing Mini Vapiano locations in the Bavarian town of Ingolstadt and in Vienna, smaller restaurants with orders to go as well as table service. Both are progressing "well beyond our expectations," Mr Halfmann said. A third Mini Vapiano is scheduled to open in Chicago in March.
"The Mini Vapiano is a very interesting concept, especially for the American market," he said. The company plans to evaluate the test results early next year. "At the moment these are extremely promising."