GPI, which also operates the Spur and Dunkin’ Donuts chains, said the Burger King expansion would be focused on drive-thru restaurants as opposed to online and/or food court restaurants.
“The future expansion of Burger King will further improve bottom line profitability and allow volume discounts to be passed to Burger King, which will improve overall gross profit margins,” the company said.
GPI focused on beefing-up the profitability of its ailing Burger King restaurants in the six months to December, marginally growing its net restaurant count by three restaurants, opening four new restaurants and closing one over the period.
“The slowdown is in line with the group's tactical plan to improve the profitability of its operational businesses,” the company said.
Burger King owned 90 restaurants of which 84 are corporate owned and six were franchisees as at the end of December 2018.
GPI said Burger King’s total revenue for the year increased by 35percent from R365.6million in the prior period to R494.6m in the current period, driven primarily by new restaurant growth as well as an increase in the Average Revenue per Store (ARS).
The ARS increased by 8.1percent to R1.026m this period, a positive indicator that restaurants opened in the past 12 months were performing well and “a sign that the objective of achieving an ARS of R1.2m by June 2019 is attainable.”
The group exited the Dunkin’ Donuts and Baskin-Robbins 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,” the company said. The company subsequently voluntarily liquidated the brands after all avenues were explored.
“During the second half of 2018, GPI engaged with several potential buyers through a lengthy due diligence process, which yielded no serious offers within the set timeline,” the company said.
Grand Foods Meat Plant increased its revenue by 33percent compared to the prior year from R59.8m to R79.6m off the back of good revenue growth in Burger King as well as higher demand from Spur restaurants. The company said revenue attributed to Spur increased 14percent compared to the prior year.
The higher revenue coupled with tight operational expense controls resulted in a net profit for the period of R1m compared to a loss in the prior period of R3.9m. The group’s headline earnings rose from R13.7m in the prior period to R16m in the current period.