Latest News

Burger King announces plans to open 1,000 restaurants in China

Burger King’s international expansion shifted into overdrive Friday with the announcement of plans to open 1,000 restaurants in China over the next five to seven years.

The joint venture agreement is the largest multi-unit development deal in Burger King’s history. Burger King has recently stepped up international expansion plans, signing similar multi-unit deals in Brazil and Russia, but those were each for several hundred new restaurants in each country.

Asia is viewed as a large untapped market for Burger King and one where the brand has lagged its competitors. Burger King currently has 63 restaurants in China, while McDonald’s has more than 1,500 and YUM Brands has close to 4,000.

“Expanding our brand’s presence in China further exemplifies our company’s commitment to strengthening our global restaurant portfolio and establishing a strong brand presence in key growth markets around the world,” Elias Diaz Sese, Burger King’s president of Asia Pacific, said in a statement. “We have partnered with solid investors and experienced restaurant operators to accelerate our net restaurant growth in China, while introducing our signature great-tasting, fire-grilled menu items to millions of consumers in the country.”

There is some skepticism among restaurants industry analysts, who heard Burger King’s previous management promise to open 1,000 units in China by 2012.

“They’re still going to be significantly behind McDonald’s and YUM,” said restaurant industry analyst Steve West with ITG Research, who has initiated coverage of the stock as Burger King prepares for an initial public offering before the end of the month. “International is part of Burger King’s growth strategy but it’s going to take some time for that to have an impact on the overall story.”

The exclusive rights to expand the Burger King brand in China will be lead by the Kurdoglu family, a long-time Burger King franchisee in Turkey, and the Cartesian Capital Group, a global private equity firm based in New York. As TAB Gida, the Kurdoglu family currently operates more than 450 Burger King restaurants and is the brand’s largest franchisee outside of the United States. With this deal it will grow larger than Carrols Corp., which with 574 restaurants is now the largest Burger King operator worldwide.

“We were looking to find new markets to apply the family’s experience in quick-service restaurants,” said Peter Yu, managing partner of Cartesian Capital Group. “We thought China was a natural next market in terms of the demographic opportunities. We see tremendous potential for the Burger King brand in the region.”

Burger King had only 908 restaurants in the entire Asia Pacific region as of the end of last year spread across 14 countries and territories such as China, Singapore, Malaysia, Thailand, Australia, Philippines and Japan. The company doesn’t disclose the number of restaurants in specific countries, but after North America the brand’s largest regional presence is in Europe Middle East Africa, where Burger King had 2,882 restaurants in 38 countries and territories at the end of 2011.

  Comments