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Burger King

Burger King looks set to come to SA

The battle for the SA burger-share-of-mouth is hotting up, with news that we could soon be snacking on Big Whoppers – Burger King has said it is assessing opportunities in SA as sluggish economic growth in its US home market continues to hamper sales, making emerging markets look more attractive.

“We are currently assessing the opportunity in SA for the Burger King brand,” says the Florida-based company, according to a Business Day report.

Burger King adds taht it continuously reviews its “worldwide restaurant portfolio in the course of business. We make strategic decisions based on many factors, including development opportunities, market conditions and restaurant profitability.”

Founded in 1954, Burger King is the second-largest fast-food hamburger chain in the world, after McDonald’s, with about 12000 outlets in 73 countries. About 90% of Burger King restaurants are owned and operated by independent franchisees with 665 of these outlets based in the US.

How the company licenses its franchisees varies depending on the region, with some regional franchises, known as master franchises, responsible for selling franchise sub-licences on the company’s behalf.

Analysts have opposed views on the prospect. Absa Securities analyst Chris Gilmour says the burger market in SA was saturated: “I am very surprised they would consider this, unless they are using SA as a springboard into Africa.”

But Vestact fund manager Sasha Naryshkine believes there is room for a new competitor in SA: “The fast-food sector has done astonishingly well over the past few years, and there is still potential for growth. Burger King is a well- known international brand and could compete with Famous Brands ’ Steers division.

“But its fame would not guarantee its success. Subway is a well- recognised brand and it has not managed to capture the imagination of South Africans.”

Famous Brands would be a formidable competitor with its 520 Steers outlets across the country. Steers grew sales 6,5% in the year to February, and said it planned to open a further 20 stores this year.

McDonald’s opened its first restaurant in SA in November 1995 and operates 132 restaurants around the country.

Justin Divaris, CEO of the Daytona Group that brought the Aston Martin brand to SA, is rumoured to be involved in the deal. He has declined to comment.

Yum Brands, which owns Taco Bell and Pizza Hut, have also been enthusiastic about SA, and so it should be based on the success of its KFC brand in the country.

“There are difficulties when entering developing markets such as infrastructure and regulatory differences, but what any company is looking for is market depth and market growth and SA has that. They are looking for markets which will provide fast growth and are rapidly developing. Any company that can partake in these types of economies will want to, despite these challenges,” says New York-based Sanford C Bernstein analyst, Sara Senatore.

Yum Brands, which owns Taco Bell and Pizza Hut, have also been enthusiastic about SA, New York- based Sanford C Bernstein analyst Sara Senatore said yesterday.
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