The Sale of Burger King South Africa is Being Renegotiated

Burger King

  • Grand Parade Investments (GPI) has stated that it is renegotiating the disposal of its shares in the Burger King franchise due to the current coronavirus pandemic.
  • Although restaurants were permitted to only open for delivery, only a small number of Burger King outlets offered service due to weak financial feasibility of only providing a home delivery service.
  • It was previously reported that the purchase price for Burger King was focused on an estimated value of R670 million and R27 million for Grand Foods Meat Plant.

Grand Parade Investments (GPI) has stated that it is renegotiating the disposal of its shares in the Burger King franchise due to the current coronavirus pandemic.

The company reported in a shareholder statement on Thursday,, 21s May, that the parties concerned are renegotiating the terms and conditions of disposal and that shareholders will be notified if renegotiations are effective.

GPI said in February it will sell all the shares it holds in Burger King South Africa – 95.36 per cent – to the ECP Africa Fund as part of an ongoing restructuring process.

The deal also included all the shares it holds in Grand Foods Meat Plant. Burger King reported a challenging operating environment ahead of the nationwide lockdown, but spoke up its successes and turned to profitability despite this.

Nevertheless, the quick-service restaurant wasn’t able to function at maximum capacity during the lockout, which has now been in place at high levels for eight weeks.

READ ALSO: South Africa Urged To End Lockdown Soon To Prevent Economic Crisis

At the beginning of May 2020, restaurants were permitted to only open for delivery – but only a small number of Burger King outlets offered the service due to the “weak financial feasibility of only providing a home delivery service.”

It was previously reported that the purchase price for Burger King was focused on an estimated value of R670 million and R27 million for Grand Foods Meat Plant. The decision to sell the company was part of GPI ‘s efforts to concentrate on activities that could generate value for shareholders.

“Over the last 2 years management has undergone a process of restructuring the business with the main aim of reducing the discount to iNAV (indicative net asset value). This process involved discontinuing loss-making businesses and improving the profitability of its operational food and manufacturing businesses.

The restructuring resulted in a vast improvement in profitability which assisted in reducing the discount,” it said reaffirming thee rationale for the deal.

“The restructure resulted in a vast improvement in profitability which assisted in reducing the discount,” it said by way of the rationale for the deal.

In March last year, GPI said it would close its South African branches of Dunkin Donuts and Baskin Robbins, which counted losses in excess of R70 million.

The group said it was trying to find interested parties to buy the brands, but noted that it did not receive any serious offers in the allocated period, leading to the liquidation of businesses.

“Dunkin’ Donuts and Baskin-Robbins continued to experience a challenging six months with the second quarter having the most significant impact on trading. The Group decided to exit these brands based on the continued poor performance and a sustained period of losses.

“The exit of Dunkin’ Donuts and Baskin-Robbins is the first step of a broader strategy to revert back to an investment holding company,” it said.

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