Grand Parade Investments (GPI), the master franchise holder for Burger King in South Africa, is looking to offload a majority stake in the fast food chain’s operations in the country. The move comes after the company closed down its Dunkin Donuts and Baskin Robbins franchises in South Africa earlier this year.
GPI is reportedly having talks with an unnamed buyer to sell a majority stake in Burger King South Africa. It acquired those rights for more than R700m ($47.9m) in 2013. Burger King in South Africa turned over R1.01bn ($68.5m) in 2019 from its 86 stores. It also generated a profit for the first time since it was launched. GPI is trying to sell while it’s on an upward curve: sales inits Burger King outlets in the year to end June 2019 rose by 34.2%, while like for like sales increased by 10.3%.
GPI’s food division has been an expensive failure and unpopular with investors in recent years: so far the company has invested more than R1.4bn ($95.9m), once outstanding debt has been accounted for. Grand Parade is still looking to maintain a minority interest in Burger King South Africa.
One of GPI’s big problem is that the fast food market, which numbers more than 250 chains in South Africa according to Trendtype’s proprietary research, is severely congested in South Africa. Besides McDonald’s and KFC, both of which have large, established networks in the country, there are also large domestic players like Steers, Spur and Wimpy. Despite this, some investors believe that Burger King has the capacity to double the size of its store network in the next few years.
GPI is not the only fast food operator to suffer problems with an international franchise. In November 2019, Taste Holdings, the Starbucks franchisee in South Africa, sold its 13 Starbucks stores in the country for R7m ($475,000). It is also seeking to sell its Domino’s Pizza franchise and its The Fish & Chips Co and Maxi’s QSR brands and exit the food business.
GPI will also sell its remaining 30% stake in casino operator Sun Slots as part of its bid to cut debt.
