Rating Release

Agusto & Co affirms the “Bbb-” rating assigned to Eat ‘N’ Go Limited

The rating expires on 30 June 2023.

Agusto & Co affirms the “Bbb-” rating assigned to Eat ‘N’ Go Limited (“Eat ‘N’ Go”, “ENG” or “the Company”). The rating affirmation underpins the relative stability in ENG’s operating cash flow after the coronavirus-induced lull in 2020. The rating also considers the Company’s established market position as well as its strong brands and ongoing geographical diversification. These strengths are however moderated by ENG’s elevated debt profile and
concerns over its escalating input costs and interest burden, which have continued to exert pressure on its profitability.

Eat ‘N’ Go Limited is a leading Quick Service Restaurant (QSR) operating under the Domino’s Pizza, Cold Stone Creamery and Pinkberry Frozen Yoghurt franchises in Nigeria with a total of 182 stores and 11 commissaries across Nigeria and Kenya. Eat ‘N’ Go is renowned for its technology-driven approach to food delivery and offers products such as pizza, chicken, bread, fries, cupcake, ice cream, milkshakes and frozen yoghurt. In the review period, Eat ‘N’ Go expanded its product offerings with the introduction of jollof rice meals to capture the growth opportunities that exist in the fast food industry. The Company is essentially a wholly-owned subsidiary of Krone Holding Inc., which is ultimately controlled by four shareholders. The performance of Eat ‘N’ Go has been marred by several constraints such as rising food inflation and foreign exchange (forex) illiquidity which has adversely impacted the
availability of imported inputs. This is in addition to intensifying margin pressure as management continues to prioritize store expansion, which it believes will translate to greater sales and sustainable profitability in the medium to long term when consumer behaviour and industry conditions normalise. Therefore, Eat ‘N’ Go has continued to record lower profit margins when compared with rated peers in the QSR space despite recording an average top-line growth rate of 41% over the last five years (excluding the pandemic year).

The opinions expressed in this rating release do not represent investment or other advice and should therefore not be construed as such. Visit www.agusto.com for further information.