The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

AML Foods plans to refocus on developing and strengthening its ‘low volume/high yield’ franchise offerings, its chairman telling Tribune Business yesterday that its food store businesses had been unfairly targeted by the Government’s 2013-2014 Budget.

Due to increased Business Licence fees and other taxes, and uncertainty over the impact of the imminent Value Added Tax (VAT) regime, Dionisio D”Aguilar said the BISX-listed food group had to bring its food store expansion plans to a halt, and focus on the high yield franchise business.

Speaking at the launch of AML Foods’ remodelled Dominos Pizza store at Cable Beach, Mr D’Aguilar said that for the past two years the company had been focused on growing its food store business with the creation of new Solomon’s Fresh Market stores.

“We are now totally refocused on developing and strengthening our franchise division, since it is where we are expecting to yield a greater return to our shareholders,” he explained.

“Food stores, which everyone knows are high volume, low margin businesses, much like gas stations, have been targeted in the new Budget through the new Business Licence regime and the new proposed Customs processing fee.

“They now pay a disproportionately high portion of their net income in taxes to the Government. Add to that the oppressive price control regime and the uncertainty surrounding the introduction of the new VAT AML Foods has brought any thought of expanding its food store business and creating the jobs at this time to a halt.”

Mr D’Aguilar further explained: “The franchise business is for us a lot more profitable in terms of what percentage of the sale gets down to the bottom line.

“We are primarily in the food store business, which is extremely high volume and a very low percentage drops to the bottom line. With the introduction in the Budget of higher Business Licence fees on higher revenue companies, food stores have, in my opinion, been unfairly targeted for increased tax revenue.

“We are already a very low margin business and a very high volume business. We create a lot of jobs, pay a lot of Customs duty already, and feel it’s a little unfair for us to be penalised because of our high volume.”

He added: “The franchise division, on the other hand, has remarkably less volume but a higher percentage of the sale drops to the bottom line, so with the change in the tax structure we have decided to focus on the area of our business that’s going to yield the most to the bottom line.”

AML Foods employs 862 people, with 250 of those employees working in the Dominos franchise.

The company’s president and chief executive, Gavin Watchorn, said it hoped to launch its Carl’s Jr burger franchise sometime later this year, and open its first restaurant in 2014.