Retail giant PT Mitra Adiperkasa (MAPI) will be selling a majority stake in its Domino'€™s Pizza Indonesian franchise to Singapore-based investment manager Everstone Capital Asia Pte. Ltd. as part of the company'€™s business consolidation, one of the company'€™s executives has said.

MAPI director Susiana Latif said in Jakarta on Wednesday that in addition, the company was also mulling the possibility of selling its stake in Burger King in order to reduce its operating costs, which have dragged down the retailer'€™s bottom line.

Susiana said MAPI would finalize next week an acquisition agreement with Everstone for Domino'€™s. '€œWe have been in talks with potential investor[s] for the divestment for the last six months,'€ she said during the company'€™s public presentation.

MAPI vice president director Virendra Prakash Sharma said the firm would sell 51 percent of its wholly owned Domino'€™s franchise to Everstone, which plans to operate between 120 and 130 outlets of Domino'€™s Pizza across the country over the long term.

'€œFor Domino'€™s Pizza, we reached an understanding with Everstone of Singapore, ['€¦] while we are actively working on our Burger King stake,'€ he said, refusing to reveal details about the latter. Susiana said the firm had decided to take the measures because Domino'€™s Pizza and Burger King, which make up only between 2 and 3 percent of MAPI'€™s total revenue, had contributed negatively to the firm'€™s net profits.

MAPI'€™s specialty stores contributed 93 percent to a total Rp 45.5 billion (US$3.9 million) in net profits in the first quarter, followed by department stores and other business lines, which contributed 10 percent and 2 percent, respectively.

Its food and beverage division, meanwhile, contributed (-)5 percent of MAPI'€™s net profits in the first quarter of this year, primarily driven by Domino'€™s Pizza and Burger King.

'€œThe two brands are strong and the demand is good, but we need more outlets to reach a healthy economic scale,'€ Susiana said.

She added that in order to enjoy such an economic level from operating the two food chains, MAPI had to have 150 Domino'€™s Pizza outlets and around 60 Burger King outlets, while the company only had 60 Domino'€™s Pizza and 47 Burger King outlets with slow expansion growth for both, burdened by relatively high operational costs.

MAPI'€™s corporate secretary, Fetty Kwartati, said the company was focusing on greater cost efficiency and expanding its strong, profitable brands this year. She said MAPI would allocate Rp 600 billion for capital expenditure this year, a decrease from Rp 850 billion last year.

MAPI will use both internal cash and bank loans to fund the capital expenditure.

'€œWe also plan to issue bonds this year to fund the expenditure if the market is bullish,'€ she said, declining to reveal the estimated amount to be raised from the issuance.

Fetty said the firm had already spent Rp 150 billion of the allocated expenditure to open 49 new stores between January and March this year, bringing MAPI'€™s retail network to a total 1,828 stores as of April 2014. MAPI aims to add another 201 new stores nationwide this year, including Bengkulu.

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