Burger King Holding Corp. (NYSE:BKC) announced this morning that it would begin to follow an aggressive strategy in Russia. The firm released a press release earlier today detailing their plans to open hundreds of new restaurants in the emerging market in the coming years.
The plan will see Burger King Holdings team up with Russia’s largest Burger King franchiser Burger Rus and the Russian investment bank VTB Capital. In Russia the Burger King chain trades under the name Burger King (R). The franchiser is already adept at quick expansion of its restaurants.
According to the company’s president, Jose Cil, Burger King views its Russian business as a tremendous opportunity for growth. The Russian franchiser, Burger Rus, has already opened 54 stores in Russia inside of the last two and a half years.
Electron Capital Partners' flagship Electron Global Fund returned 5.1% in the first quarter of 2021, outperforming its benchmark, the MSCI World Utilities Index by 5.2%. Q1 2021 hedge fund letters, conferences and more According to a copy of the fund's first-quarter letter to investors, the average net exposure during the quarter was 43.0%. At the Read More
Russia offers a great opportunity to fast food retailers as it remains unsaturated unlike the fast food, or as Burger King calls it “Quick Service”, restaurant soaked Western world. The service sector in the emerging economies is booming and is set to boom harder in the coming years if growth sticks closely to trends.
Burger King is, at the moment, traveling down a long road toward its new IPO later this year. The offering was announced in April of this year. The company is being guided by legendary activist investor Bill Ackman who is known for his attempts to bring greater value to companies in the service industry.
Ackman worked at both McDonald’s Corporation (NYSE:MCD) and The Wendy’s Company (NYSE:WEN) in the past and did a great job of improving returns at both of those companies. He knows his way around a fast food chain and he has brought that expertise to Burger King.
Burger King was turned around in the early 2000s and went public for the first time in 2006. During the financial crisis the company suffered several setbacks even as the industry as a whole tended to grow. Burger King was purchased by Brazillian investment firm 3G Capital Inc. and was taken off of the stock exchange in 2010.
Ackman has been involved in Burger King for some time and under many different guises. He owns about 10% of the company under Pershing Square Capital, he is a shareholder in 3G Capital and his vehicle Justice holdings Ltd. will delist when Burger King goes public and relist as Burger King Worldwide in New York.
The deal is a complex one but if the aggressive growth strategy pays off it could be a lucrative one for Ackman.