Today reported in economic times, this surely would have a impact on other chains operating in QSR segment considering the fact that Domino’s has already pioneered delivery services.
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Not sure how much relevant it is to this topic. But an insightful video.
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MoneyControl predicting an Earning CAGR of 297% !!!
How is this even possible.
Would like to know everyone’s view on this.
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Forecast for FY2022 on tickertape. Don’t know on what basis they predict these things. Huge disconnect between things being reported among several websites.
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Obviously cagr estimate in moneycontrol is a printing mistake .burger King is planning to achieve 1000 stores by fy26 including India + Indonesia. It would definitely take some time for a store to break even and some of the stores they open might get closed due to non profitability . So it all depends upon how quickly they learn and adapt . I am seeing burger King ,devyani, barbeque nation etc similar to what jubliant was 10 years before . Burger King has got extra advantage in terms of less royalty fees next to jubliant , pan India franchise ( compared to sapphire, devyani,Westlife) and better delivery capacity ( own delivery using bk app).
Disc: invested through sip
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Just a thought which comes to mind as a shareholder, if say 10 years down the line burger King or for that matter any such cash burning foreign MNC decide that it’s no longer viable to do business in India…like say a Ford…who are leaving just at cusp of EV boom in India…what happens to their stock and shareholders?
I understand that these QSRs are not the MNC subsidiaries in India so the MNC is not really dependent on their profitability but rather their revenues… which anyways they will grow at good pace…it’s the profitability that will remain in question…so MNC deciding to quit Indian operations could be a more strategic call rather than a mere profitability call…but in any case it is a possibility and profitability would play some role in long term sustainability of the MNCs franchisees in India and therefore the contract with MNC on the MNCs favourable terms for eternity…
Would be good to know what and how would any such decision of quitting Indian operations implemented and how share prices react…does it go all the way to 0 or any buy backs or exactly what happens?
Disc. Invested in burger King & other QSR indian franchisee owners, hence concerned. Not a buy/sell recommendation
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The Q2 results were really good. Even performance in Oct 2021 has been super considering ADS is surpassing precovid level. Any thoughts on why there is an underperformance in stock price. Is valuation a concern(which should not be considering similar valuations given to other QSRs like Westlife, Devyani etc) OR currently market would want to see the execution of BK Cafe, business recovery in a more sustainable manner to take a call. Considering BK is showing higher growth Vs peers, seems a god buy at the CMP
Disc: Invested with a tracking position
This is an interesting question and such a scenario is definitely possible. So, I scouted for this answer in the Franchise Agreement section of the RHP, but found nothing exactly in particular.
The only scenario that was mentioned is what happens if the franchise agreement is stripped off.
If, after the Development Rights are no longer in effect, our Company receives an offer from a third party to purchase, directly or indirectly, a Company-owned Burger King Restaurant (or any portion thereof or interest therein) or any equity interest in our Company, our Company shall be required to offer to sell the Company-owned Burger King Restaurant (or any portion thereof or interest therein) to BK AsiaPac at the same purchase price and on substantially the same terms and conditions as the third party offer
So, even in the case if franchise agreement is stripped off due to the incompetence of the franchisee, its existing investments will not go down to zero.
And the scenario you mentioned won’t happen due to the incompetence of the franchisee but due to an industry specific macro factor, like in case of Ford.
Now, since there is no mention of an exact answer let me try to offer some:
I suppose that the franchisee will certainly receive some compensation from the brand owner.
And in addition,
- The franchisee will be allowed to sell the stores to a different brand’ franchisee, e.g. Reliance Retail for its Subway franchise.
or, - The franchisee will be allowed to run the stores under a different brand if get a new franchise agreement from that brand, e.g. Wendy’s.
or, - The franchisee will be allowed to launch & own a new brand and run the stores under that brand name.
The last scenario may seem absurd but I have seen that happening under a different circumstance. Bakery brand Monginis exited Kolkata market owing to differences with their franchisee and overnight the franchisee changed the shops to a new brand called Mio Amore.
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A few questions which I could not ask in the conference call, can someone here help me out with the same please? (If we know)
- What is the break-even period per restaurant?
- What is the delivery split for our own app vs aggregators? How do the margins differ, do we have any special tie-ups with zomato/swiggy on data sharing and commissions like JFL does?
- Can someone help me out with understanding the finance costs? Considering there isn’t any debt, are they treating the rent as finance cost? (read something about accounting treatment but wasn’t able to understand it well).
thanks in advance!
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The board has approved raising of funds by way of further issuance of securities through public and/or private offerings including preferential issue, qualified institutions placement, further public offer or any of the permissible modes in one or more tranches, for an aggregate amount not exceeding Rs 1,500 crore.
Besides, the board of directors also approved changing the name of the company from “Burger King India Ltd” to “Restaurant Brands Asia Ltd".
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Lot of things happening in Burger King India recently after listing. Not sure what to make of it. Indonesia business was first roped in and now the name of the business itself changed. There is some equity dilution also, share capital to be increased from around 500 cr to 600cr…also raise of capital can be by public offering as well…any inputs on the impacts of these steps, vision of company and way forward welcome…
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My only concern with this business is continuous dilution of equity and this trend doesn’t seem to be stopping. Equity raised capital is the most expensive way to do so and I am now re-evaluating it’s position in my portfolio. I understand they are at an entry stage and are eyeing huge growth. Don’t exactly remember if they have answered any questions on these lines (i.e. if any alternate ways to raise funds was available , can raise D/E to 2 if needed ?)
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This time equity dilution is one of mode of raising money…can you cite occurrences before this time after listing as you mention “continuous”?
could it be that they cannot increase debt because of an upper limit as per their contract with parent burger king and hence do not want to go down that line?
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Pre-IPO dilution to increase is acceptable but I am hoping down the years, this doesn’t dilute further. Fingers crossed on hopes it’s one time. Because I don’t find current valuations expensive according to their goal aspects so QIP at this point of time didn’t make a lot of sense to me.
I am not aware of any such limit because their underlying goal is already very aggressive. Such clauses will act as pulling from both sides.
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The only reason i can think of this is maybe they plan to rope in some other than burger king brand, hence money raise and name change, else how does is matter.
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Restaurant Brands is the ultimate owner of the Burger King brand globally. Refer to https://www.rbi.com/English/corporate-profile/default.aspx for details
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Informative
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