Deal View with Ashish Patel: Java House Group

Ashish Patel, Managing Director at The Abraaj Group, shares his perspectives on Abraaj’s latest investment in East Africa — the 100% buyout of Java House Group, the largest casual dining/food services chain in East Africa. Java House Group consists of three iconic brands: Java House, Planet Yogurt and 360 Degrees Artisan Pizza.

Established in 1999 in Nairobi, Java House is an iconic brand that has defined the restaurant space in Africa, to become one of the region’s strongest players. We asked Mr. Patel to share his thoughts on the casual dining sector in East Africa and what makes the transaction such a compelling investment.

Java House Group

Q: Let’s start with some numbers. Today, Java House Group has 60 stores with three brands across 10 cities. Can you tell us more about the investment rationale and what made it compelling for Abraaj?

Ashish Patel: At Abraaj, we deploy private capital in consumer driven opportunities across growth markets. East Africa is a vibrant market with resilient growth driven by a young, rapidly urbanizing and growing middle class. These consumers are “eating out” and looking for affordable, trendy casual dining experiences. In Kenya, 25% of the population live in urban cities. The same percentage eat at all-day and formal dining locations two or three times a week. These drivers play into our investment themes.

There are not many well-established and home grown F&B brands that have been successful in scaling in the casual dining sector. This is what makes Java House Group such an attractive investment. The brand is feeding this demand through Java House, a trendy all day coffee, casual dining concept; Planet Yogurt, the first self-service frozen yogurt chain in Kenya and Uganda; and 360 Degrees Artisan Pizza, an upmarket Italian pizzeria concept in Kenya. Often credited for creating the ‘eat out’ culture in Kenya, Java House Group is a household name among East African consumers — recognized for its food quality, consistent value (big portions, good prices), and great casual dining experience. The brand has an outstanding management team, as well as a comprehensive and scaled end-to-end supply chain.

Q: Abraaj takes on an active ownership model when investing. How will Abraaj partner with Java House Group in scaling regionally and strengthening the business?

Ashish Patel: We think of ourselves as partners in growth. It’s the essence of our approach. We partner with strong management teams to grow the business, from developing more robust infrastructure to streamlining operations, expanding regionally and enhancing operations. ESG is an integral part of our value creation as we believe that embedding environmental, social and governance considerations can add tremendous value to the business. So it is more than just buying and selling, but really ensuring that we work hand-in-hand with the Java House Group management team to grow the business in an efficient, profitable and sustainable way.

We have exciting plans ahead for Java House — from the perspective of geographic and thematic expansion. To expand the business’ footprint across the region, we will leverage the strength of the brand, management and infrastructure to introduce new and exciting home growth concepts in East Africa and cater to evolving consumer preferences. It’s really about making the experience locally relevant, yet ensuring that the experience at each outlet across brands and markets is consistently positive.

Q: In broad terms, can you describe the Group’s experience in the casual dining sector and what learnings/trends have been observed from these investments?

Ashish Patel: Abraaj has deep experience investing in the QSR/casual dining space, including in Kudu (the largest QSR chain in Saudi Arabia by number of outlets), Acurio (a leading Peruvian restaurant operator with a global presence), and Wine Connection (a wine-themed restaurant and wine retail chain in Southeast Asia). The ‘eating out’ culture is rapidly growing in these markets, and in lieu of home cooked food, young middle class consumers are opting for a more ‘social’ dining experience. We are also seeing the advent of local specialized brands capturing market share from global brands, as the experience is more customized to meet local flavors, demographic trends, and spending habits.

Read the press announcement of the transaction here: The Abraaj Group to acquire Java House from ECP. Follow the Abraaj Deal View series here on transaction insights.

Follow @AbraajGroup on Twitter or The Abraaj Group on LinkedIn for insights on the trends that are shaping our markets, industries, sectors and businesses.

The Abraaj Group

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