IF ONLY I HAD THE MONEY TO BUY THE PIE COMPANY.
THIS AUSSIE PIE SHOP HAS GOT TO BE A WINNER FOR INVESTORS WITH RESTRUCTURING THE COMPANY
Pie Face founder Wayne Homschek was once a Wall Street banker.
Dozens of high profile bankers, fund managers and investors have been left eating humble pie after the collapse of Pie Face, one of the first Australian fast-food chains to expand overseas.
The Pie Face Group’s founder and major shareholder, former Citigroup banker Wayne Homschek, has appointed accounting and advisory firm Jirsch Sutherland as administrators and is attempting to restructure and refinance the company, which owns more than 70 stores selling pies, sausage rolls and coffee.
Mr Homschek told Business Day on Monday that parts of the company were still profitable and he was still considering an initial public offer next year.ooo
However, Pie Face was struggling to service leases on three factories after shifting production to a single site near Rosehill Gardens racecourse in Sydney this year to cut costs and improve efficiency.
Jirsch Sutherland partner Rod Sutherland said a number of company-owned stores were also losing money and Pie Face’s international partner in America “has caused some grief as well.
“But it’s really the company owned stores that need restructuring,” Mr Sutherland said.
High profile investors who piled into the company in recent years ahead of an anticipated $150 million IPO and much-touted global expansion now believe they may be tapped for more capital.
Pie Face and its advisers Macquarie Capital and Commonwealth Bank raised $35 million over the last five years in pre-IPO-style funding, including a $15 million investment in 2012 from US casino developer Steve Wynn. The cash gave Mr Wynn a 43 per cent stake in Pie Face’s US operations and first rights in other global deals. He planned to open 16 stores in Manhattan.
Other investors included retail entrepreneur Brett Blundy, who owns Bras N Things and soon-to-be-floated Lovisa, Optimal Fund Management founder Warwick Johnson, Rothschild Australia chairman Trevor Rowe, former Rothschild banker Robert Crossman, Will Vicars’ Caledonesia Investments, Pacific Equity Partners’ Paul McCullagh, former Macquarie Capital director Wayne Kent, former Austereo executive Brian Bickmore and Fat Prophets’ Angus Geddes.
Mr Homschek said investors were supportive of the restructuring, which is aimed at underpinning the growth of Pie Face’s 44-odd franchised stores in Australia and its wholesale business.
“We’re potentially going to refinance Macquarie Capital and are looking at bringing in new senior lenders,” he said.
Pie Face was founded in Sydney in 2003 by US-born Mr Homschek and his wife, interior designer Betty Fong, who spotted a gap in the market for a newer, healthier version of the iconic Aussie pie. At its peak, Pie Face and its partners operated more about 80 stores in Australia, the US and New Zealand. However, industry sources said the company tried to grow too fast.
“He (Wayne) really went far and wide for a small company – he tried to do everything,” one source said.
Mr Wynn, the US partner, closed six of his seven stores in New York last month and is now pursuing a wholesale and direct retail model.
In Australia, Pie Face now has 72 stores, about one third of which are company owned.
Earlier this year one of Pie Face’s franchises sued the company for $800,000, alleging misleading and deceptive conduct, but the case was settled after mediation for a smaller amount.
In October last year the company announced a major deal to open at least 100 stores in the Middle East through an agreement with Dubai-based hospitality group Landmark.
Mr Homschek said Pie Face’s Australian problems would have no impact on its international operations.
The first two Middle East stores are due to open this week in Abu Dhabi and Dubai and another two will open by the end of the year.
Another two stores are due to open in Singapore, taking Pie Face’s presence to four, and the first stores are due to open in Japan, Korea and the Philippines early next year.