The Investment Column: South Beach rolls out

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The Independent Online
London is on a high. The economy is booming, City bonuses are rising to obscene levels again and it has been widely acclaimed as Europe's trendiest city. Bright new bars and restaurants are popping up everywhere. South Beach Cafe is the latest of a long line of companies hoping to cash in on the good times.

Though still a tiddler, the group plans to roll out its South Beach Cafes chain across the capital where customers can choose from a host of vegetable and fruit drinks as well as exotic coffees while nibbling on a bagel and tapping into the Internet. It is also looking to bring yet another pizza peddler to British shores. Pizza World will offer upmarket pizzas at downmarket prices. The group plans to have a string of outlets here by the end of next year.

Pre-tax losses escalated to pounds 506,000 (pounds 367,000) for the six months to June. Chairman Thomas Burnham, one of a clutch of ex-Domino Pizza executives who dreamt up South Beach's concept, points out that costs have risen sharply as the group spends heavily establishing its franchising business. His argument goes that once franchisees come aboard earnings will rise sharply and the group should break into the black next year.

The shares have been beached since joining the market from Ofex in May, falling from 6.25p to 3.75p. If either of the new eateries take off investors could be sitting pretty. The problem is fierce competition. Sky-high property prices mean more restaurant ventures fail than succeed. The shares unchanged, yesterday, are a punt for the brave, but don't risk your life savings.

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