Burger King growth delays GPI dividend

SOUTH AFRICA – Shareholders in empowerment company Grand Parade Investments (GPI) need to delay gratification.

The company indicated on Thursday it was feeding a voracious growth appetite in fledgling fast-food chain Burger King, and had consequently delayed the dividend announcement expected in its year to end-June results, released on Thursday.

GPI — which prides itself on regular dividend flows — said an announcement about a payout to shareholders would be made only once the substantial proceeds of its recent sale of its casino and limited-payout machine interests were banked.

CEO Alan Keet said the company had in the past financial year invested heavily in Burger King’s operations to secure accelerated growth for this new business.

GPI secured the Burger King master franchise in late 2012, but Mr Keet said that growth had already exceeded development commitments by 400%.

The start-up losses at Burger King shaved 11.4c/share off GPI’s earnings, which were derived mainly from its discontinued gaming operations, leaving the bottom line down 26% at 22.5c/share.

A divisional breakdown in GPI’s results showed Burger King generating revenue of R127m, but with a R66.5m loss in earnings before interest, tax, depreciation and amortisation.

Mr Keet expected Burger King to make up the temporary losses, forecasting the venture to break even by June next year based on a target of 100 store openings.

He was satisfied Burger King’s supply chain had been secured and that food margins were at appropriate levels. “The losses should be seen more as an investment into the future and they have now been stemmed.…”

Burger King has 19 outlets in the Western Cape, Johannesburg and Durban. Mr Keet said that on average, stores were beating initial budget forecasts by 50%.

“We could have had maybe five more store opens, but the metal workers’ strike hampered our efforts to secure equipment for our kitchens.”

GPI utilised net cash in operations of more than R100m

August 30, 2014; http://www.bdlive.co.za/business/retail/2014/08/29/burger-king-growth-delays-gpi-dividend

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