Everstone cannot exit until the current contract is completed. Also majority of the company is owned by QSR Pvt Ltd (a Everstone subsidiary), they are not laying the ground work and scaling to 700 restaurants just to exit at these valuations.
These types of risks (PE firm may leave etc) are just noise at this point.
The business makes money, has good runway ahead of it, is increasing in market share and is governed by a professional fund. What more is needed? Everything else seem noise.
I would pay attention if the company misses its store target and if same store sales growth decreases or if their operating costs increases.
Exactly, so they can exit on completing 700 number target. There is no target on profitability. They exit on a euphoria of growth and remaining investors worry about profitabilityâŚthoughts?
Thats a good question and I have in mind but look at the way how CEOs project future growth and profitability and get excellent valuations today itself. Some professionals are expert in projecting and creating story and there are always buyers of new and old stories in the market. So, you never know. Imagine, if today they can exit without even half of 700 stores and 0 profitability (that is if they want to exit there will be happy buyers), then what stops them in 3 years down the line with 600 stores and 0 profitability with a projection of excellent profitability and EBITA bla bla 3 years further down the line.
Disc: Had applied in IPO, got nothing and bought small quantity on listing day at 118. Invested and biased. Not a buy/sell recommendation.
As per the financial year ended March 2020, Burger King reported a loss of Rs 76.6 crore on revenue of Rs 841.2 crore, but Westlife Development had a profit at Rs 36.6 crore on revenue of Rs 1,547.8 crore.
At operating level, Burger Kingâs earnings before interest, tax, depreciation and amortisation (EBITDA) stood at Rs 103.9 crore with margin at 12.4 percent, while Westlife had an EBITDA at Rs 144 crore with margin at 9.7 percent for FY20.
Westlifeâs same-store revenue growth strengthened 4.0 percent during the year FY20, whereas Burger Kingâs same-store sales growth declined by 0.30 percent in same year.
Making loss or margin is not a concern for me but can someone please help me to understand why BK is degrowing at SSG level while Westlife is registering a growth.
Recently I visited (previous visit was in January) Phoenix Mall in Lower Parel Mumbai, where both Burger King and McDonalds used to have their restaurants adjacent to each other.
But now Burger King is closed and McDonalds was super full even during COVID times.
I thought maybe this information could help someone. Cheers!
I may know the reason, so I did a very small survey with my students before the IPO came, asked them if they prefer McD or Burger King? the general answer was - BK fries are good but still, they prefer going to McD. some even said BK burger is cheaper than McD but still they go to McD. so it is a generation thing I guess, BK will take time.
Yeah this will be good ⌠in FY19 the SSG grow around 29% so the number was very high may be it was a turnaround type so lower growth was expected this year but degrowth was certainly not acceptable âŚ
In another instance, MacD & BK are placed opposite to each other in Sakinaka(Near Times Square building), Andheri East, I observed always MacDâs was occupied 60-70% & queues in payment counter, whereâs it was empty in BK(just opposite to it), never had to wait in a queue
Pre Covid observation, I moved out of Mumbai henceforth.
I am pretty much convinced that demand for MacD is much more than BK.
A funny trivia: HDFC Infrastructure fund has invested in Burger King (1.69% of the portfolio)! I wonder what kind of infrastructure a Whopper would help to build.
I imho rs.130 is a good price if investment horizon is more than three years, recent correction may be due to second wave of covid.
Easy availability of prime properties at reasonable rent would aid margin expansion once the pandemic is under control.
I am quite skeptical of this BK Cafe initiative, not sure what the company hopes to achieve other than imitating McDonaldâs. Several players burnt their fingers in the cafe business - Barista, CCD, Starbucks, Costa Coffee etc. My understanding is all of them have lost money or are losing money. Not sure how McCafe is doing though. Seems like a needless diversion for Burger King.
Same here. I would have hoped that they will start tracking this intiativeâs profitability with 10-20 stores first but they have guided 75 stores of BK Cafe. Personally, this is in line with their aggressiveness towards 420 BK stores as well, which is not very comfortable and doesnât give a thought towards profitability. They did close 5 BK stores this year though.
Not sure how successful it is globally, but if such a model is implemented here, Starbucks is certain to shed some market share, although they have a more powerful brand.
Globally the cafe business is very much profitable. Maybe profitability needs a certain scale! Regarding CCD I believe the cafe business was profitable and was a cash-cow for their unrelated diversifications. Also, Jubilant Foodworks is hopeful of making Dunkinâ Donuts break-even soon enough.
