Grand Parade Investments (GPI) is in talks to offload a majority stake in Burger King South Africa.
In an interview with BusinessDay, GPI founder and chair Hassen Adam said that the proposed sale would reduce the group’s stake in Burger King from 96% to “a non-operational minority interest”.
He said that this was in line with the group’s strategy to become an investment company.
“There are people we are talking to regarding Burger King. We want to maintain a minority interest. Burger King is a big business to run. We are approaching 100 stores now.
“There is nothing finalised yet because there is no binding offer on the table,” he said.
Adam will be stepping down from the group at the end of January 2020.
Burger King in South Africa
GPI published is financial results for the year ended June 2019 in September, reporting that Burger King finally started turning a profit in the country,
Burger King’s sales for the year increased by 34.2% from R756.2 million in the prior year to R1.015 billion in the current year, despite the economic downturn, and improved its previous loss of R27.1 million into a profit of R11.7 million for the period.
The growth in Burger King was driven by higher revenues from new restaurants opened and a significant improvement in same store sales of 10.3%, GPI said.
The total number of Burger King restaurants at the end of June 2019 was 92, of which 86 are corporate owned.
The net restaurant movement for the year totalled six, which included the opening of 10 new restaurants and the closure of four unprofitable restaurants.
The average monthly restaurant revenues (ARS) increased by 14.3% from R0.911 million last year to R1.042 million this year, largely as a result of positive restaurant comparative sales of 10.32% (2018: 3.45%).
A total of 18.6 million customers were served compared to 15.6 million in the prior year.
Burger King’s success in the country has not been matched by other brands GPI tried to introduce locally.
In March, GPI said that it would close its Dunkin Donuts and Baskin Robbins branches in South Africa which counted losses over R70 million.
GPI, which holds investments in casinos and the food industry, said that it has a broader strategy of returning to being an investment holding company.
The group said that it tried to find interested parties to buy the brands, but noted that it got no serious offers in the allotted period, leading to the businesses being liquidated.
“Dunkin’ Donuts and Baskin-Robbins continued to experience a challenging six months with the second quarter having the most significant impact on trading. The Group decided to exit
these brands based on the continued poor performance and a sustained period of losses.
“The exit of Dunkin’ Donuts and Baskin-Robbins is the first step of a broader strategy to revert back to an investment holding company,” it said.