Chicken chain seeks private equity to spread its wings

Roast-chicken chain Red Rooster hopes to drum up $2 million in private equity as it looks to expand the chain.

Red Rooster New Zealand, which has four outlets here, wants the money for its plans to increase store numbers to seven by the end of the year.

Private equity specialists Campbell MacPherson have been retained to help with the funding round and director Alistair Ward expects substantial interest in Red Rooster's plans.

"There is a strong market for private equity in New Zealand as high-growth companies seek equity investors rather than traditional debt lenders," he said.

The Australian chicken chain has more than 400 outlets across the Tasman and describes itself as a healthier takeaway option because the chicken is barbecue-roasted rather than deep-fried.

A group of local investors brought the chain in New Zealand in December 2004 - putting up $5 million in capital between them - and hold the master franchise from Australian Fast Foods.

They had planned to open 10 stores within the first year, but a lack of suitable sites has prevented the company from spreading its wings.

Managing director Mike Ryan said the company now had a good pipeline of suitable sites.

A fifth outlet is due to open in Mt Wellington next month with more to follow in Hamilton and Auckland by the end of the year.

"We're ready to go to the next stage, which is more rapid expansion," said Ryan.

Next year it plans to open a new outlet every two months.

Red Rooster had built up a strong customer base and appealed to families rather than just the 25- to 30-year-old bracket - the biggest eaters of fast food, Ryan said.

But the company was still a long way from knocking Restaurant Brands-owned KFC off its perch as the country's top takeaway chicken chain.

KFC earned revenue of $171.8 million in the year to February, up 1.1 per cent on the year earlier.

Restaurant Brands also faces a possible challenge from US pizza chain Papa John's, which is reported to be planning 75 stores here. This would see it up against Restaurant Brands' Pizza Hut stores.