On March 27, HRC Pizza Group, linked to London businessman Raheel Choudhary, filed a lawsuit against Drake Food Services (DFSI) of Nicolás Ibáñez for £12 million, corresponding to $11.400 million. The reason: not having completed the contractually agreed purchase of HRC Pizza before the end of 2022.
It all started in March 2021, when DFSI bought 60% of the company that owns the London pizza franchise from Choudhary, for an amount that, according to reports, would have reached US$40 million. At that time, a put was agreed, that is, a put option of the English businessman in a term that expired at the end of last year. Thus, the company DSFI M25 Ltd was created, which today manages 90 Papa John’s stores, the majority in the London area.
But the business did not have the expected results. In 2022 the company suffered “a significant drop in its sales reflected in a decrease of up to 23% (in the same stores) compared to 2021, as well as a substantial increase in operating costs,” the company reported to the British trade regulator on January 3.
Now, Choudhary says that three months after the deadline and after both he and HRC Pizza Group “they offered ample opportunity to settle the matter amicably, an agreement could not be reached with DFSI”So they decided to go to court. The case is pending in the commercial court of the United Kingdom.
Consulted by DF MAS, Choudhary says that “I met Mr. Ibáñez through the mediation of Papa John’s, and our relationship was always strictly business and professional. I hadn’t heard his name before 2019, but after our first few meetings, I developed the utmost respect for him as an entrepreneur, seeing what he had done to become the largest international Papa John’s franchisee.”
He adds: “I thought our business in the UK would be good for both of us and also for Papa John’s. Unfortunately, all of this ended up being a great disappointment, since he did not commit to his part of the bargain. It did not buy its remaining 40% of the company as agreed, and while DFSI was reported to have been in significant financial trouble, we know it was still buying restaurants in the UK as of mid-2022, months before we breached our contract.”
The businessman reiterates that his will “was always to find a friendly solution to the breach of contract.” But he adds that “Mr. Ibáñez chose to ignore our invitations to discuss other possibilities, and for sending intermediaries who did not have decision-making power to deal with such an important matter.”
And he clarifies that Drake did not overpay for this British business. Both Drake and Papa John’s conducted a thorough and professional due diligence process, and all financial figures were confirmed by Papa John’s. The person who oversaw this at Drake (David Vera) has already left and is the current CEO of Telepizza and Pizza Hut in Chile.”
And it ends: “Mr. Nicolás Ibáñez is a well-known and respected person in Chile, and We expect him to honor his contractual agreement.”
Sources linked to DFSI assure that Choudhary would have sold them at a price that did not correspond to the business: “The best effort was made to understand what we were buying. Clearly there must have been something wrong because the subsequent reality turned out to be very different. They sold us a pig for a poke! It didn’t even last six months before deflating, and we sent quality people to manage it.” They also warn that They are considering suing Choudhary and have already hired trial lawyers in the UK:“We are going to demand everything paid and compensation for what we have lost. It will not be cheap for him to have sued us ”.
