I live in Jaipur. Other QSRs, even the local ones, also have similar (not same) timings. Because of local time limits for public convenience.
Dine-in, even for pubs and bars, have time restrictions.
And, not all location stores are available for delivery during late night. Late night delivery a play to sweat out fixed assets, especially with low power consumption and manpower.
PS: not invested, but, studied Burger King India.
And, one thing to pay attention (from investment perspective, not trading perspective) Popeye franchise in India was given to Jubilant foods. Not Burger King India. May just be due to financial strength of jubilant foods over Burger King India.
I have been tracking RBA for the past 1~1.5 years. 464 Indian BK stores, 149 Indonesian BK stores and 25 Popeyes with close to 2200~2400cr annual revenue for around 4,000cr Market cap seems a good valuation if we compare it with other listed QSRs. Indonesian business has been affected due to geo political tensions, however, it is bound to recover sooner than later. Management seems good and proactive. If we compare the results with other QSRs, gross margins, restaurant margins etc. is very similar to its competitors. Only the depreciation is very high, but it is expected, due to rapid expansion.
Westlife has marketcap of 12kcr, RBA is at 4k cr. Westlife has 408 stores as compared to 464 Indian BK stores. The ADS for Westlife is higher as compared to BK India but Westlife has bigger stores. SSSG for Westlife was -6% whereas for Indian BK it was -3%. Cash generated for half year ended 30/09/2024 by Westlife (Consolidated) pre tax is 164cr whereas for RBA (Standalone) it is Rs. 153cr.
Depreciation is not high just because of rapid expansion.
It is high due to high rents for outlets, as Burger King was late entrant in india. Where as others are established players with lower rental agreements carried forward.
Source: Management commentary.
You have to account that in calculation for margins and cashflow generation in near term. Management is optimistic about catching up in the medium to long term.
Group CEO (Rajeev Varman) has long history in QSR and Burger King.
I think difference in SSSG is also because of maturity age of stores. Westlife are matured, hence headwinds impacted much more. Whereas BK is new and growing(with large room for existing addressable market to target and capture), hence low base may have smoothened some of the impact. I can be wrong here, just my line of thinking
Can someone tell how to check their annual lease payable. In most cases it can be seen in cash flow statements under financial cash flows. However, cant see for this company. Am I missing something ?
i would strongly recommed to look at pre-Ind AS EBITDA (including rental charges) - since most of profitability is eaten away by depreciation due to faster store openinings.
The biggest issue with RBA right now is - Indonesia being the cash guzzler and dragging the overall cash position - which is leading to fund raise for india operations expansion.
i do see merit in investment if Indonesia breaks even. right now i dont see light at the end of tunnel.
Dislcosure: recently exited RBA after 2 years of holding
also, smaller format stores have just 1-2 employees, almost no dine in - its just a kitchen - just like metro station stores. its easier to breakeven for a jumbo king set up at metro, rather than a BK store
RBA consol has a cash drag from indonesia. i have also been tracking QSR space since long. I think better metric is
compare capex per store with market cap per store
pre- Ind AS EBITDA yield (EBITDA/Marketcap) - most of them trade between 2.5-3.5% - any one trading above 4-5% is a good sweet spot if debt is not too high.
I agree Indonesia being a drag. But if you read the commentary not only from BK Indonesia, but also Westlife India, McDonalds USA, KFC Indonesia; everyone is mentioning about the geopolitical issues causing problems in certain markets. I think it is cyclical and over a period of time would revert back to mean.
The management has been proactive and they have been taking a lot of measures such as reducing the number of stores, cost cutting, menu innovation to get the Indonesian business to Cash breakeven levels. I think, given sufficient time, Indonesian business will provide some value.
Current capex per Indian store is approx 2.6cr⌠Market cap per store if we include the Indonesian stores would be 4000 / (464 + 149 + 25) = 6.2cr. With an increase in number of stores; this difference would keep on reducing. Also the revenue per Indian store at 118k ADS is around 4.3cr.
âAccording to the deal, Burger King India would buy 65.79 per cent stake in Burger King Indonesia from F&B Asia Ventures, which holds 83.32 per cent stake in the promoter of Burger King India, QSR Asia. Thus, it would be a related-party transaction that would require a nod from Indian minority shareholders for the deal to go through.â
So, this is like blinkit acquisition (bailout) by Zomato. By chance/ hard work, in hindsight, it paid off for Zomato.
âBK Indonesia is the second largest QSR brand in Indonesia, the fourth most populated country. About 60 per cent of the population is under 35. On concluding the deal, Burger King India will have exclusive rights to operate the Burger King franchisee in Indonesia till 2039.â
Why is Indonesia BK struggling if it was in such a a great position? Also if it is in such a great position why did the owners moved it to public listed company?
(Privatize the profits, socialize the losses - mantra of capitalism)
can someone highlight what is the geopolitical issue in Indonesia which is causing residents and tourists to eat less burger and pizzas? I tried to check recent news but could not find any such. Thanks
The real reason for exit of the Promoters Everstone Capital from Indonesia as well as India is that they are a Private Equity Fund. They are not much interested in operating businesses or holding them for ultra long term.
It is. If you look at the KFC Indonesia result for Q2FY25 (SSSG regrowth), Mcdonalds USA Q2FY25 commentary (they have mentioned about lower sales in Asia due to geopolitical headwinds), Westlife Foodworld Q2FY25 concall; they all have been affected by the same geopolitical tensions.
Just quoting from Westlife Foodworld concall transcript:
Q: Did you say that the stores that were impacted due to the geopolitical thing the last year around, are they back to those earlier levels now?
A: No. Like I said, some stores have recovered.There was a part of stores which were impacted. We had given the number last year. If I look at it from that standpoint where they were and they are impacted, they are better off, but we are marginally better off. They still largely remain impacted. And I can quote a few examples of store in Mumbai, where what we used to do, we are not even doing half of what we used to do. So it remains tough in some of those belts.
The article from 2021 says⌠âF&B Asia Ventures, which holds 83.32 per cent stake in the promoter of Burger King India, QSR Asia.â. How come Everstone become promoter?
Does Everstone own F&B Asia Ventures? If so the name itself suggests itâs food and beverages - how come they canât be interested?
