Burger King sees profit on the horizon after 61 outlets in SA

Burger King is getting closer to making a profit in South Africa.

Grand Parade Investments, which owns the licence to operate Burger King locally, reported this week that the US fast food chain sustained a loss after tax of R23.9 million for the half-year to December, down from a loss after tax of R40.3 million in the preceding half-year.

Burger King’s revenue for the six months to December 2015 was R224 million, compared with revenue of R134.5 million in the preceding half-year.

Burger King opened 17 new restaurants in the six months to December at an average cost of R7.9 million per restaurant, taking the total number of restaurants in South Africa to 61.

“Burger King is ahead of its development schedule, as per its master franchise licence, which required 23 restaurants to be opened by December 31 2015,” the company said.

“The effect of the drought throughout South Africa and the related increase in food prices did not affect the margins during the period. It will, however, put significant pressure on the gross margin during the six months to June 2016,” Burger King said.

Burger King wants to have more than 80 restaurants opened by the end of June.

“There is a clear focus to improve the average monthly restaurant sales and to maintain the current gross margin despite significant increases in food input costs,” Grand Parade said.

In May 2013, Grand Parade signed a long-term master franchise and development agreement with Burger King.

The company’s aim is to have Burger King hold between 5% and 7% of the fast food market in South Africa by 2020, and between 15% and 20% of the burger market.

Grand Parade recently increased its fast food interests by acquiring the South African master franchise licence for US companies Dunkin’ Donuts and Baskin-Robbins for R12.3 million.

Burger King revenue for the six months to December 2015 was R224 million compared with revenue of R134.5 million in the prior half year.

Burger King opened 17 new restaurants during its latest six months at an average cost of R7.9 million per restaurant, taking the total number of restaurants to 61 as at 31 December, 2015.

“Burger King is ahead of its development schedule as per its Master Franchise licence which required 23 restaurants to be opened by 31 December 2015,” the company added.

“The effect of the drought throughout South Africa and the related increase in food prices did not affect the margins during the period. It will, however, put significant pressure on the gross margin during the next six months to June 2016,” Burger King said.

Burger King has targeted to have more than 80 restaurants open by the end of June.

“There is a clear focus to improve the average monthly restaurant sales and to maintain the current gross margin despite significant increases in food input costs,” Grand Parade said.

In May 2013, Grand Parade signed a long-term master franchise and development agreement with Burger King.

The company is aiming that by 2020 Burger King will have between 5 and 7 percent of the fast food market and between 15 and 20 percent of the burger market.

Away from Burger King, Grand Parade increased its fast food interests by acquiring the South African master franchise license for Dunkin' Donuts and Baskin-Robbins for R12.3 million.

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