SOUTH AFRICA – The food and gaming firm, Grand Parade Investments (GPI) is reducing part of 18.5% stake it holds in the steakhouse restaurant chain Spur Corporation as it shifts focus to its global hamburger franchise, Burger King SA.
According to the Business Report, the sudden move to focus on the Florida-based chain of fast food restaurants was because the franchise had shown positive results and great potential over the past year.
Grand Parade Investments (GPI) which owns majority of the franchise agreement for Burger King SA said the decision was made possible by the group’s strong performance allowing it to satisfy their contractual commitment in terms of the Burger King Master Franchise Development Agreement.
The agreement encompasses a series of commitments intended to strengthen the Burger King brand in important markets as well as investing and developing leading brands in the quick service restaurant industry.
“In the last year we were able to roll-out more than 20 stores (mainly drive-thru’s) to achieve this.
Whilst our on-going contractual commitment is 5 stores per year we are able to do this without gearing the business and this is therefore self-funding”, said Executive Chairman of GPI, Hassen Adams.
In the 2016 full year earnings, Burger King led the way to a profitable year at Restaurant Brands International, its parent company which witnessed 5% rise in revenues and 100% increase in earnings per share.
Based on the key performance of Burger King SA, Adams said GIP will be rolling out between 20 and 25 stores every year.
“This will require initial funding, however, the results of this investment could be extremely positive.
We have looked at funding this roll-out strategy and have decided to liquidate some of our shares in the Spur Corporation which is ungeared and in our opinion is better invested in Burger King SA and will deliver better returns,” added Adams.
Plans to increase Burger King SA’s investment include franchise Dunkin Donuts whose business model was changed to enable take it into profitability within 2 years.
GPI has invested potential profits into growing the Burger King brand; expand into manufacturing and electronics by acquiring businesses in food and related industries to complement the Burger King supply chain.
In a further expansion into the food industry, GPI entered into an agreement with Spur Corporation Limited in July 2014 to acquire 10% of Spur’s issued share capital.
The group also revealed the exit of two executives within the past year with Hassen Adams taking over as interim CEO.