Exits – Gresham Trust’s pizza-to-go snapped up by Papa John’s

Nasdaq-listed Papa John’s International Inc, the US’s third-largest pizza company, has paid GBP20 million ($32.9 million) for Perfect Pizza, the largest independent pizza takeaway and delivery business in the UK. The deal has delivered a gross IRR of 97 per cent to Gresham Trust, which in 1997 invested GBP3 million ($4.9 million) in the GBP3.2 million ($5.3 million) buyout of Perfect Pizza.

The 21-year-old company enjoys a 15 per cent share of the UK pizza market, which is currently valued at GBP360 million ($590 million) a year and is forecast to grow by at least another third. Perfect Pizza currently operates 205 outlets, more than 90 per cent of which are franchise operations.

This year, Perfect Pizza set an industry record by becoming the first company to win the British Franchise Association’s Franchisor of the Year Award twice, having previously taken the title in 1991.

Papa John’s operates 2,200 stores in North America, where it is the fastest growing takeout/delivery pizza brand. With average sales of $14,346 per store per week, annual turnover at Papa John’s is currently running at $1 billion (euros 990 million), and the company has now set its sights on global expansion. As a first step in this direction, the US acquiror plans to convert the Perfect Pizza outlets to the Papa John’s brand within the next two to three years and will work to expand the chain to some 370 stores. Paul Marson-Smith, managing director of Gresham Trust, explains that the US firm intends to exploit the value inherent in the Perfect Pizza brand by trading as Papa John’s delivers Perfect Pizza’.

Gresham Trust engineered the deal, which it describes as a marriage’, following an approach from Papa John’s which Marson-Smith said maximised the value of the business’. Previously, the management team, headed by Tony Sherriff, had been planning to launch an IPO at some point during 2000. All the incumbent managers will continue with the company under Papa John’s ownership.