Burger King expands in Africa as fast-food chains fight for budget shoppers

EDINBURGH — Burger King has been slashing prices in the US to compete with KFC, McDonald's, Taco Bell and Wendy's to win over budget customers. It has also decided to expand its empire to Africa countries where it expects fast growth to more than make up for shrinking margins elsewhere. Burger King bosses are excited by expectations that the world's fastest-growing cities over the next decade are likely to be in Africa. Conspicuous in its absence from a Financial Times feature on Burger King conquering Africa is the performance of Burger King South Africa, which has about 80 stores but has recorded losses for at least six years. Shareholders blame executives at Grand Parade Investments – which holds the master franchise licence for South Africa – for the company's woes, saying poor decisions such as the wrong choices for store locations have dragged Burger King down. Musical chairs at the top of Johannesburg-listed empowerment company Grand Parade, which has seen at three CEOs in as many years, hasn't helped, either. – Jackie Cameron.By Thulasizwe Sithole.Burger King is in talks to open restaurants in sub-Saharan African countries, including Nigeria, as the US fast-food group accelerates its international expansion to better compete with rival McDonald's, reports the Financial Times..___STEADY_PAYWALL___.Daniel Schwartz, chief executive of parent company Restaurant Brands International, told the Financial Times that the world's second-biggest hamburger chain was "significantly under penetrated" in the continent, where it had a "huge opportunity".."Burger King is one of many global companies drawn to Africa's demographics. The UN predicts that the world's 10 fastest-growing cities between 2018 and 2035 will be in the continent. With a median age of 19, Africa's population is expected to double to more than 2bn by 2050 and to double again by the end of the century," says the newspaper.."Burger King, majority owned by the Brazilian private equity group 3G via Toronto-based RBI, is adding about two or three restaurants per day globally. Openings are expected to come in at about 1,000 this year, up from little more than 600 in 2015.."Most of new foreign stores will be in Asia and Europe. The hamburger chain has opened about 600 restaurants in Russia from a standing start eight years ago, and is on track to open its 1,000th outlet in China by the end of the year," reports the FT..The Whopper maker's global footprint of fewer than 17,000 restaurants — nearly all of them franchised — is less than half of McDonald's, which has more than 37,000 restaurants, of which more than 3,000 are operated by the company itself, it points out.."Shares in RBI have underperformed McDonald's by 9 per cent in the past four years, in part because of difficulties at the Canadian coffee chain Tim Hortons, which it also owns. Intense competition in its home US market has added to the pressure. RBI's $27bn market capitalisation is about a fifth of McDonald's, according to Bloomberg data*," says the FT."We are so under penetrated around the world relative to our peers — and ourselves in the US," it quotes Daniel Schwartz, chief executive of Burger King parent RBI, as saying. "We're just scratching the surface.".Schwartz sees 'huge opportunity' in Africa. José Cil, president of Burger King, said fast-food restaurants "aren't really well penetrated yet" in sub-Saharan Africa. He added: "We think Nigeria is an amazing opportunity, we think east Africa as well.".Burger King has been moving into the region over the past 18 months, striking a deal with Servair to expand in markets including Kenya and Ivory Coast, says the FT.."Burger King's interest in expanding in Africa's most populous nation comes as Nigeria's economy is inching out of a recession brought on by the oil price crash. Unemployment has soared to more than 18 per cent.."President Muhammadu Buhari's administration has come under fire recently for its treatment of South African telecoms company MTN, the country's largest mobile operator with more than 50m subscribers, and among its biggest non-oil foreign investors.."In August, the central bank accused MTN of illegally repatriating $8.1bn in dividends. A week later, the attorney-general's office slapped the company with a bill for $2bn in back taxes. Executives in the commercial capital of Lagos have warned that the moves will spook foreign investors," continues the FT..In spite of the challenges of doing business in the west African country, Nigeria has moved up 24 positions on the World Bank's ease of doing business index, from 169 in 2016 to 145 in 2017, adds the pink newspaper.

Burger King expands in Africa as fast-food chains fight for budget shoppers

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