(Bloomberg) -- Brazilian restaurant operator Zamp SA is looking to expand Starbucks’ presence in the country to 1,000 locations — a nearly ten-fold increase from today.
Zamp, which is backed by Mubadala Capital, seeks an aggressive expansion starting in about two years, according to a person familiar with the matter who asked not to be named discussing private information. The timeline isn’t exact and Zamp sees it as a mid-term target, the person said. The strategy would focus on big cities and their airports, including Rio de Janeiro and Sao Paulo, where robust demand is anticipated, and Zamp is looking at different store sizes.
A Starbucks Corp. spokesperson said the company is awaiting the outcome of judicial proceedings in Brazil after the previous operator filed for bankruptcy, adding that the coffee chain remains in discussions with Zamp to operate the market.
Zamp, which operates Popeyes and Burger King restaurants in Brazil, agreed to purchase the Starbucks rights from SouthRock Capital for 120 million reais ($22 million) in June after SouthRock lost its license with Starbucks amid bankruptcy proceedings. SouthRock closed almost a third of its Starbucks locations, arguing its operations were hobbled by high inflation and interest rates coming out of the pandemic. Brazil antitrust regulator approved the deal in July.
Zamp declined to comment. The stock rose less than 1% in Sao Paulo trading on Wednesday. The shares have declined about 44% so far this year.
Zamp’s plans would build out a Starbucks presence in Brazil that is still relatively small. Starbucks Corp., which works with third-party operators in Latin America, Europe and some other regions, reported having 128 licensed Brazil stores in its most recent quarter, compared with 850 in Mexico, 609 in Indonesia and 1,937 in South Korea.
Mubadala, which is a unit of Abu Dhabi’s sovereign wealth fund, took control of Zamp in February. Since then, Zamp has moved to acquire popular international food franchises in Latin America’s largest economy. Earlier this week, it agreed to operate the Subway brand in Brazil. It’s looking for more fast-food opportunities in the region, according to the person.
See also: Mubadala Said to Eye Outback Steakhouse for Brazil Expansion
Zamp’s shares have fallen since Mubadala took control in part due to investor concerns related to its exit from the Novo Mercado segment of Sao Paulo’s stock exchange. Companies trading on the Novo Mercado segment have more stringent disclosure and governance requirements. Zamp’s chief executive officer and co-founder also exited earlier this year.
The company is looking to grow aggressively following an investment of about $200 million earlier this year from Affinity Partners — the private equity firm founded by Jared Kushner — into Mubadala. Part of the funding is earmarked for Zamp expansion.
Starbucks Corp. has said it seeks to expand its global store footprint to 55,000, compared with nearly 40,000 today. However, the company’s operations are in flux following the surprise appointment last month of Brian Niccol as CEO and the abrupt departure of his predecessor following two quarters of slumping sales. Niccol, who gained prominence for engineering a turnaround for burrito chain Chipotle Mexican Grill Inc., arrived at Starbucks last week and has started to outline his strategy and make changes to management.
--With assistance from Daniela Sirtori.
(Updates to add Brazil’s regulatory approval for Zamp’s acquisition and share trading. A previous version of the story was corrected to reflect that Zamp is still in talks to become Starbucks’ operator in Brazil.)
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