Fast-food market consolidates in Poland

AMREST Holdings NV, the operator of KFC and Starbucks restaurants in central Europe, has raised its stake in Sfinks Polska SA as it seeks to consolidate Poland's growing fast-food market.

Sfinks rose 12 percent to 20.34 zloty in Warsaw yesterday, the biggest one-day gain since they started trading almost two years ago, valuing it at 188.2 million zloty (US$87 million). AmRest dropped 2.7 percent to 86.40 zloty.

AmRest's accumulation of a 5-percent stake in Sfinks is "a sort of first stage," AmRest Chief Financial Officer Wojciech Mroczynski said. "We've been thinking of consolidation, so nobody had any intention of stopping at this point."

Residents of the country spend about 5 percent of their food budgets on restaurants, compared with an average of 27 percent in the European Union and 50 percent in the US, AmRest competitor Grupa Kosciuszko Polskie Jadlo said when announcing a share sale last month.

AmRest is falling because "shareholders are aware that a lot of cash would be needed to buy Sfinks," Marcin Sojka, an analyst at the brokerage of PKO Bank Polski, told Bloomberg News. "We can see a very aggressive investment policy ?? that takes money, and so you can't expect any dividends."

AmRest said last week it would buy Apple Grove Holdings LLC, an operator of Applebee's restaurants in the US, for about US$85 million, depending on the target's earnings.

Further purchases of shares in Lodz, Poland-based Sfinks will depend on the share price and liquidity, and the reaction of current owners, Mroczynski said.