Marfrig Sees Brazil Steak Diners Spurring Growth After JBS Sale

Marfrig Alimentos SA (MRFG3), Brazil’s No. 2 beef producer, expects the arrival of international restaurant chains from Longhorn Steakhouse to Olive Garden to drive sales growth as middle-income Brazilians spend more eating out.

“Beef accounts for about 70 percent of protein consumed in restaurants in Brazil,” Sergio Rial, who heads Marfrig’s Seara Foods unit, said today in an interview from the company’s Sao Paulo headquarters. “Of course people eat chicken and pork but, unless they are vegetarians, on average what they truly prefer are steaks.”

Brazil’s second-largest maker of TV dinners and frozen pizza is refocusing on supplying beef cuts to restaurant chains in Latin America’s largest economy after agreeing to sell chicken and pork processing plants and a tannery unit in Uruguay to JBS SA (JBSS3) in a 5.85 billion reais ($2.74 billion) all-debt deal announced yesterday.

Marfrig, a supplier of hamburger patties to McDonald’s Corp. and steaks to OSI Restaurant Partners Inc.’s Outback Steakhouse, plans to gain market share in the food service segment where margins are higher compared with supplying supermarket chains, said Rial, the former Cargill Inc. chief financial officer, who will take over from Marcos Molina as Marfrig chief executive officer next year.

Sao Paulo-based International Meal Co. signed a Feb. 21 contract with Orlando, Florida-based Darden Restaurants Inc. (DRI), operator of Olive Garden and Longhorn, to open 57 restaurants in Brazil, Colombia, Panama and the Dominican Republic.

To contact the reporter on this story: Lucia Kassai in Sao Paulo at lkassai@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

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