Grand Parade Investments (GPI), Burger King’s master franchise holder in South Africa is selling a majority stake in the Burger King franchise and its Grand Foods Meat Plant business to private equity firm ECP Africa Fund for R697m ($46.1m) – or just $500,000 per outlet.
Grand Parade is selling a 95.4% stake in the South Africa Burger King franchise. It will maintain a minority interest as part of its strategy to become a pure investment company. It has owned the master franchise since 2012 and launched its first Burger King in South African in 2013. Its Grand Foods Meat Plant supplies burgers to the South African market, with Burger King accounting for 90% of sales.
ECP Africa Fund is an investment vehicle of Emerging Capital Partners (ECP), a Pan-African private equity firm. It has 60 investments that include Eco bank, MTN Cote d’Ivoire, Kenyan QSR chain Java House and carbonated soft drinks bottler Atlas Bottling Corp in Algeria. It has had nearly 50 exits.
In the year to end June 2019, Burger King sales in South Africa rose by 34.2% to R1.01bn ($68m). GPI added six new Burger King outlets over the 12 month reporting period, taking it to 86 outlets in South Africa. It jow has 92 outlets. Like for like sales also increased by 10.3%. At the time we reported that benchmark sales per store (around $0.8m per year) compared with sales per store in Morocco of $0.76m and what McDonald’s turns over per store in Egypt ($0.79m). The sales improvement also meant GPI’s food division went into profit (before losses related to closing the Dunkin’ Donuts and Baskin Robbins franchises), having incurred a R107.7m ($7.64m) loss for the financial year to end June 2018.
In February 2019 GPI closed its struggling Dunkin’ Donuts and Baskin Robbins franchises in the country, citing poor performance. The move followed activist investor pressure to focus its resources on the Burger King franchise. It is not the only South African operator to struggle with an international franchise. In November 2019 Taste Holdings, the Starbucks franchisee in South Africa, sold its 13 Starbucks stores in the country for just R7m ($475,000), having failed to take on local chains effectively.
