NEW YORK 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.
Separately, the Humane Society of the United States, emulating tactics of the animal rights group People for the Ethical Treatment of Animals, said Monday it has purchased Domino’s shares in an attempt to change the restaurant company’s purchasing practices. The Humane Society said it hoped to “move the company away from pork suppliers that confine breeding pigs in gestation crates” and poultry producers that use standard methods of slaughter that the group says is cruel.
Pork producers confine gestating sows for the pigs’ protection and to keep them from rolling over on their young, according to the National Pork Board.
The National Chicken Council’s protocols for slaughter, including requirements that the birds not be sensible to pain when they are killed, can be downloaded here.
Domino’s is the 39th company in which HSUS has bought shares. Earlier this month, the lobbying group said it had invested in Steak n Shake Co. and Jack in the Box Inc.
Domino's operates or franchises 8,886 restaurants worldwide.
Contact Bret Thorn at [email protected].