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Grand Parade loses appetite for Burger King

Looking to sell a stake in the business.
GPI signed a long-term master franchise agreement with Burger King in 2012. Image: Citizen

Grand Parade Investments, which holds the Burger King franchise in South Africa, said on Wednesday it was in talks to sell a stake in the business, without giving a reason.

Shares in GPI fell 6.84% to R3.54  at 0920 GMT, their lowest level in almost three-weeks.

GPI signed a long-term master franchise agreement with Burger King in 2012, betting on South Africa’s lucrative fast-food market, consumer appetite for flame-grilled burgers as well as their price appeal.

The Whopper Burger maker, which launched its first restaurant in Cape Town, South Africa in 2013, competes directly with market leader McDonald’s Corp and other restaurant chains such as RocoMamas.

The launch in South Africa had formed part of Burger King’s expansion into high-growth emerging markets.

In the year ended June 30, the fast food franchise started generating a “long awaited” profit of R11.7 million for GPI from a loss of R27.1 million, driven by higher sales from new restaurants and a significant improvement in same store sales of 10.3%.

As of June 30, Burger King had 92 restaurants, with a total of 18.6 million customers served in the period compared to 15.6 million in the prior year, it said in its full-year result statement released in September.

In February, GPI had announced plans to close its loss-making Dunkin Donuts and Baskin Robbins franchises in South Africa after failing to find a buyer.

In June, the company sold back a portion of its 17.5% stake in restaurant franchise group Spur Corporation.

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I think that’s a mistake. Burger King should be a cash cow!

I get the feeling (as I did in 2005) that the management of GPL is very confused and actually don’t know where they want to take the company – I mean do burgers and casinos make for good business sense

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