Following the lead of it’s competitors Like McDonalds, KFC, Burger King will try to set up shop in throughout Africa.
South Africans could soon be snacking on a Big Whopper. Burger King said yesterday it was assessing opportunities in SA as sluggish economic growth in its US home market continues to hamper sales, making emerging markets look more attractive.Yum Brands, which owns Taco Bell and Pizza Hut, have also been enthusiastic about SA, New York- based Sanford C Bernstein analyst Sara Senatore said yesterday. “We are currently assessing the opportunity in SA for the Burger King brand,” the Florida- based company said. Burger King said it continuously reviews its “worldwide restaurant portfolio in the course of business. We make strategic decisions based on many factors, including development opportunities, market conditions and restaurant profitability.” Ms Senatore said growth in emerging markets had outpaced growth in developed markets. “There are difficulties when entering developing markets such as infrastructure and regulatory differences, but what any company is looking for is market depth and market growth and SA has that. They are looking for markets which will provide fast growth and are rapidly developing. Any company that can partake in these types of economies will want to, despite these challenges.” Founded in 1954, Burger King is the second-largest fast-food hamburger chain in the world, after McDonald’s, with about 12000 outlets in 73 countries. About 90% of Burger King restaurants are owned and operated by independent franchisees with 665 of these outlets based in the US. How the company licenses its franchisees varies depending on the region, with some regional franchises, known as master franchises, responsible for selling franchise sub-licences on the company’s behalf. Absa Securities analyst Chris Gilmour said the burger market in SA was saturated. “I am very surprised they would consider this, unless they are using SA as a springboard into Africa.” But Vestact fund manager Sasha Naryshkine said there was room for a new competitor in SA. “The fast-food sector has done astonishingly well over the past few years, and there is still potential for growth. Burger King is a well- known international brand and could compete with Famous Brands ’ Steers division. “But its fame would not guarantee its success. Subway is a well- recognised brand and it has not managed to capture the imagination of South Africans.” Famous Brands would be a formidable competitor with its 520 Steers outlets across the country. Steers grew sales 6,5% in the year to February, and said it planned to open a further 20 stores this year. McDonald’s opened its first restaurant in SA in November 1995 and operates 132 restaurants around the country. Justin Divaris, CEO of the Daytona Group that brought the Aston Martin brand to SA, is rumoured to be involved in the deal. He declined to comment.
Investing in Africa and opening up franchises will help drive growth for Burger King. When one looks at the demographics and growing middle class, the opportunity to invest ,establish a customer base would be a worthwhile investment. Pepsi, and KFC have clearly seen the great opportunity of doing business in Africa, it would be wise for Burger King to follow suit.