Burger King's franchisee in India reported a larger third-quarter deficit due to rising expenses and customers cutting back on eating out due to inflation. For the three months that concluded on December 31, the company reported a net loss of 504 million rupees ($5.82 million), down from a loss of 361.8 million rupees the previous year.
Burger King outlets in India saw a 0.5% decline in same-store sales, which the restaurant operator attributed to "flat demand."
Over the past several quarters, international fast-food companies like McDonald's and Burger King have increased their efforts to offer less expensive options in an effort to draw in India's price-conscious clientele in the face of high inflation.
Burger King provided some of the most affordable offers in the nation's market, such as a package of two vegetarian and two chicken burgers for Rs 79 and Rs 99, respectively. The company's income increased by 5.8% to 6.39 billion rupees as a result of this and the launch of more outlets. Although, the brand’s total store count in India remained at 510, up 69 outlets from last year and 46 outlets from the preceding quarter.
High ingredient costs, however, also had an impact on the business, raising overall costs by 8.5% to 7.03 billion rupees. In the midst of suppressed consumer sentiment, pizza giant Papa John's International and cafe chain Tata Starbucks have stated that they are reconsidering their future plans for Indian markets.
Burger King India is in talks to acquire controlling stake in PT Sari Burger Indonesia that operates Burger King chain of restaurants in Indonesia.
According to the burger chain PT Sari Burger Indonesia (BK Indonesia) can be a good fit given the company's experience in managing and operating the Burger King brand in India.
As per BK, they see high growth potential in the Indonesian market and believe that it can be the right partner to drive the Burger King brand in Indonesia though its next phase of growth.
The company has entered into a non-binding understanding with F&B Asia Venture (Singapore). F&B Asia through its wholly owned subsidiary currently holds an indirect equity interest of 65.79% in BK Indonesia. F&B Asia is a member of the 'promoter and promoter group' of BK Indonesia.
Burger King India, in response to an invitation for a non-binding offer from F&B Asia, submitted a non-binding indicative proposal for acquisition of controlling stake by way of a combination of primary and secondary transaction (i.e. up to 85% in BK Indonesia directly or indirectly by way of a secondary purchase and a further primary investment of up to $40 million), at a pre money enterprise value of BK Indonesia at $183 million on a cash free and debt free basis. The proposed transaction is subject to finalization of the structure, terms of acquisition, approval of the board and shareholders of the company.
It also announced that the proposal, on a non-binding basis, has been accepted by F&B Asia on Friday. Accordingly, the parties are subject to an exclusivity period of 90 days to explore and negotiate the proposed transaction.
Burger King India entered India in November 2014 and set the benchmark of opening 200 outlets in just 5 years.
QSR chain Burger King India has filed papers with market regulator Sebi to raise ₹ 542 crore through fresh issuance of shares.
Burger King's initial public offer (IPO) will consist of fresh issue of equity shares amounting to ₹ 542 crore and an offer for sale of up to 6 crore equity shares by the promoter QSR Asia.
The shares will be listed on the BSE and the NSE.
Also Read: Burger King India partners with Delhi Police to provide burgers to orphanages
The QSR chain had filed draft papers with Sebi earlier in November 2019 to raise ₹ 400 crore through fresh issues of shares and an offer for sale of up to 6 crore equity shares by QSR Asia.
It has now increased the funding issue size, in the additional papers filed with the market regulator.
Burger King India will use the IPO proceeds to start new company-owned Burger King Restaurants and for general corporate purposes.
May Interest: Burger King India gets SEBI's green signal to float IPO
It is also planning to roll out around 700 restaurants, including sub-franchised outlets by December 31, 2026, shared the draft prospectus.
Burger King India has partnered with Delhi Police to distribute burgers to children in orphanages and community clusters amidst the current COVID-19 crisis.
The Don Bosco Ashalayam and Auxilium Snehalya in Palam Village and Asha Grah Children Home for Boys and Girls in Dwarka were served with burgers as mid day snacks.
Further, kids of JJ clusters in the area of Vikas Puri, GTB Enclave, Madhu Vihar, R.K Puram and Kalkaji were also served burgers. As part of this partnership, Burger King distributed 5,000 burgers.
“We work closely with police officers in our communities on a regular basis and in these unprecedented times, we would like to salute them for their selfless service to the nation. We are honoured to partner with the Delhi Police to provide safe and hygienic food to children in this hour of need,” shared Srinivas Adapa, CMO Burger King.
The staff delivering the meals wear protective gear like masks and gloves to ensure safety, said the company. Since Covid – 19 outbreak, Burger King says that it has further strengthened its restaurant procedures around food safety, cleanliness and hygiene and increased its sanitization frequency in all restaurants across the country.
The Delhi Police also appreciated the brand gesture and were happy to partner with this initiative which brought a smile on the faces of young kids.
Burger King India has filed its draft prospectus for an initial public offering (IPO) with markets regulator, Securities and Exchange Board of India (SEBI). The IPO will be a combination of fresh issue and offer for sale.
Through the IPO, the burger chain is planning to raise Rs 400 crore as fresh capital while its promoter, QSR Asia Pte Ltd, will partially exit via an offer for sale of 6 crore equity shares.
A person directly aware of the matter said, “The total offer is expected to be of Rs 1,000 crore, of which the secondary component will be about Rs 600 crore through which all its shareholders will exit partially.”
The QSR chain is looking to use Rs 290 crore of the fresh capital to launch new restaurants in India. It is eyeing at having about 325 restaurants, including sub-franchised outlets by December 31, 2020.
The company said in its draft prospectus, “We also intend to open restaurants in new areas and markets where we believe there is strong potential for growth and in addition to taking advantage of the growing online delivery market, including through engagement with delivery aggregators.”
“This strategy will also help us to efficiently manage our supply chain due to the increased reach and density of our network and the proximity of our restaurants to each other and to the distribution centres of our third-party distributor,” it further stated.
In India, Burger King has 216 company-owned restaurants and eight sub-franchised restaurants across 47 cities, including Delhi-NCR, Mumbai, Pune, Chennai, Hyderabad, Bengaluru, Chandigarh, Ludhiana, Amritsar and Kochi.
Quick-service restaurant chain Burger King has registered more sales than Starbucks in FY18. The company's sales were boosted by aggressive stores expansion, attractive entry-level pricing, and a more comprehensive vegetarian menu.
The burger chain came to India in 2014. It reported a 66% jump in its revenue at Rs 389 crore in FY18. While Starbucks that entered India in 2012 grew 28% in sales at Rs 348 crore.
Rajeev Varman, CEO, Burger King India, said, "Burger King India witnessed double-digit same-store sales and traffic growth, while continuing to open new restaurants at a rapid pace, exceeding all players. We continue to be on plan, as well as profitable at a restaurant level. We have increased our investments in growing brand awareness, sharpening our menu and value offerings and building the infrastructure in India, as we progress to launch over 500 restaurants by FY23."
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