Here’s how much money the average Burger King makes in South Africa

  • March 24, 2020 10:09 am
  • News

 

Current Burger King franchise owner Grand Parade Investments has published its interim results for the six months ended December 2019, showing solid growth in revenue and profit despite South Africa’s ailing economy.

The group reported a 19% jump in revenue to R844.4 million for the period, with EBITDA recorded at R152.87 million. After financing costs and taxation, it reported a total profit of R6.4 million for the period, up from a loss of R36.4 million in 1H 2018.

Salient features include:

  • Revenue from continuing operations increased by 19% to R844.4 million;
  • Operating profit from continuing operations increased by 315% to R81.4 million;
  • Headline earnings per share increased by 176% to 10.35 cents per share;
  • Headline earnings per share from continuing operations increased by 37% to 11.69 cents per share;
  • Basic earnings per share increased by 117% to 1.39 cents per share, from a basic loss per share of 8.23 cents in the prior corresponding period;
  • Basic earnings per share from continuing operations decreased by 67% to 2.73 cents per share;
  • Net asset value per share increased by 1.83% to 445 cents per share.
  • No dividends have been declared for the interim period.

Revenues continue to be driven by the group’s gaming segment, with its casino operations contributing R71.29 million to headline earnings. The food business, which comprises Burger King South Africa, a stake in Spur and catering business Mac Brothers, contributed R8.29 million.

According to GPI, while Burger King and Spur lifted headline earnings, Mac Brothers suffered some significant losses – while the disposal of Dunking Donuts and Baskin Robbins (nearing completion) also weighed on earnings. The liquidation is expected to be completed by June 2020.

Looking forward, it said that it would continue focusing on operations that could unlock value for shareholders, including the sale of Burger King South Africa.

While South Africa continues to face economic troubles, with consumers under pressure, the group said that it is still too early to forecast what the impact of the Covid-19 coronavirus will be.

“We are taking all necessary precautions to ensure a healthy and safe environment for our customers and staff and adapting operations to mitigate the impact of Covid-19,” it said.

Burger King

Grand Parade announced in February that it will sell all shares it holds in Burger King South Africa – being 95.36% – to ECP Africa Fund as part of its restructuring process.

The deal also includes all of the shares it holds in Grand Foods Meat Plant.

GPI has exclusive rights to develop and expand the Burger King brand in South Africa’s quick service restaurant market. It opened the first Burger King restaurant in Cape Town at 33 on Heerengracht in May 2013. It has since opened 97 restaurants at locations throughout the country.

The purchase price for Burger King is based on an enterprise value of R670 million, and R27 million for Grand Foods Meat Plant. The deal is expected to take 18 to 24 months to conclude.

The Burger King franchise has enjoyed operational success in South Africa, after GPI reworked its strategy on the franchise to focus on profitability rather than expansion.

As at December 2019, the group had 97 restaurants, 90 of which are corporate owned. The franchise contributed R7.79 million to headline earnings, with total revenue for the half-year increasing by 27.5% from R494.6 million in the prior period to R630.8 million in the current period.

This was driven primarily by an increase in the average revenue per store (ARS), which increased by 14.7% from R1.024 million in December 2018 to R1.175 million in 2019.

The franchise reported a net profit after tax of R8.75 million.

“Despite a tough trading environment Burger King managed to generate impressive top line growth. During the last 6 months BKSA slowed down restaurant growth to focus on improving the profitability of its poor performing restaurants and marginally grew its corporate owned net restaurant count by one restaurant,” GPI said.

“The stellar performance over the last quarter has put BKSA in a strong position to deliver on its targets for the 2020 financial year. The performance of the business during the second quarter of FY2020 has been very positive and has shown great promise of improved future profitability.”

Source: BusinessTech – https://businesstech.co.za/

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