Sushi specialist The Snowfox Group has been acquired by Japanese foodservice giant Zensho for US$621m (£495m).
It’s a ringing endorsement for CEO Richard Hodgson and his team, who have transformed the Yo Sushi owner from a 70-restaurant UK-only business, into a multi-channel, multi-national operation, with over 3,000 sushi kiosks in UK, US and Canadian supermarkets, including 400 Yo outlets in Tesco and Asda.
And for Snowfox owner Mayfair Equity Partners, which acquired Yo in 2015 for £81m, it represents a remarkable return – especially given the decimation of restaurant chains in the pandemic, including a CVA to downsize the Yo Sushi owner’s UK restaurant arm in 2020.
Zensho, one of Japan’s leading food groups and the number one foodservice company in Japan by sales, said Snowfox was the ideal partner to grow its global food presence.
Outside Japan, Zensho also operates Sukiya, mainly in East Asia, Advanced Fresh Concepts (AFC) mainly in the US, and The Chicken Rice Shop (TCRS), which operates halal-certified chicken rice shops in Malaysia.
As such the merger constituted a “highly complementary proposition”, with “Zensho able to bring its Japanese heritage and expertise to Snowfox’s business, to the benefit of employees, franchisees, retailers, and end-customers alike”.
Under the terms of the proposed acquisition, which is subject to anti-trust approval, Snowfox’s leadership team, including Hodgson, will remain with the business to work alongside Zensho’s senior management.
Hodgson said he was excited at the prospect of leading and building a global multichannel sushi operation:
“I believe this is absolutely the right move. I have been hugely impressed by Zensho during my recent meetings with them, and they share our own ambition of providing the highest quality, most authentic Japanese food at the best possible value.”
“Zensho recognises the value of the Snowfox Group’s highly attractive brands, our customer relationships, and our diversified international presence. Above all, it is testament to the quality, authenticity, and breadth of our Japanese food offer that a Japanese food business of Zensho’s calibre wants us to join them.”
Waqqas Ahmad, partner at Mayfair Equity Partners, praised the Snowfox management for their performance. “Richard and the whole Snowfox team have served customers exceptionally well over the last seven years, driven by a clear vision of continuous innovation and ensuring the highest quality products. It has been a pleasure to be their partner, providing specialist support to diversify their business and grow internationally. As part of Zensho, Snowfox will be primed to reach more customers than ever before.
“The fact that Zensho, a leading Japanese food conglomerate, is welcoming Snowfox to their group reflects the quality of the Japanese food business Snowfox has built.”
The Snowfox strategy involved bolting on complementary wholesale and retail businesses. The first acquisition was Canada’s Bento in 2017, with UK pre-packed sushi supplier Taiko Foods added in 2018. From having supplied just Waitrose prior to the acquisition, Taiko has gone on to win contracts with Tesco, Sainsbury’s, Asda and Lidl.
After US sushi group Snowfox was acquired in 2019, the business was renamed Snowfox Group in 2021, as the fast-growing sushi specialist eyed a £750m IPO, with accounts for the year to 28 November 2021 showing a near 50% jump in sales, despite the business shrinking its restaurant estate via the 2020 CVA.
However, while the IPO was cancelled due to volatile market conditions for new listings, amid investor uncertainty over inflation and the cost of living crisis, compound annual growth have continued at an impressive rate. The Grocer understands that sales last year were $500m, with ebitda profits of $50m, while internal forecasts show sales and profits rising at the same or higher rate.
Shares in Zensho, which has a market cap of Y984bn (£5.4bn) have doubled in the past year and have risen a further 5% since the announcement.