As more and more Indians eat out
Quick Service Restaurants(QSR) are gaining momentum!
Burger King is one such business with good potential
A thread on the QSR space and the business for Burger King!
Hit Retweet to educate maximum investors
Lets go👇
(1/23)
Quick Service Restaurants(QSR) are gaining momentum!
Burger King is one such business with good potential
A thread on the QSR space and the business for Burger King!
Hit Retweet to educate maximum investors
Lets go👇
(1/23)
What are Quick Service Restaurants?(QSR)
Quick service restaurants (“QSR”):
These are focused on speed of service, affordability and convenience and include the dine-in/takeaway/delivery sub-formats;
QSR space is one of the fastest growing space in the food markets
(2/23)
Quick service restaurants (“QSR”):
These are focused on speed of service, affordability and convenience and include the dine-in/takeaway/delivery sub-formats;
QSR space is one of the fastest growing space in the food markets
(2/23)
Young Indian population:-
The median age of India's population is 28 years.
As a young population, the demand,urge and craze to eat out is tremendous.
(3/23)
The median age of India's population is 28 years.
As a young population, the demand,urge and craze to eat out is tremendous.
(3/23)
Organized retail chains continue to gain market share.
The Chain Markets are expected to grow by about 19% over the next 5 years.
(4/23)
The Chain Markets are expected to grow by about 19% over the next 5 years.
(4/23)
QSR space split.:-
Burgers and Sandwiches
Pizza
Continue to dominate the space.
The growth in these two spaces continues to be extremely strong.
(5/23)
Burgers and Sandwiches
Pizza
Continue to dominate the space.
The growth in these two spaces continues to be extremely strong.
(5/23)
So how do the International chains operate in India?
1. Master franchise model-Franchise is given to an Indian Partner.For eg Dominos
2. Joint venture:-
The master brand works with a Indian Partner.For eg Burger King
(6/23)
1. Master franchise model-Franchise is given to an Indian Partner.For eg Dominos
2. Joint venture:-
The master brand works with a Indian Partner.For eg Burger King
(6/23)
100% company-owned-
Companies like Barbe-que Nation operate under this model.
Company-owned and franchise:
Companies like Pizza Hut Operate under this model.
(7/23)
Companies like Barbe-que Nation operate under this model.
Company-owned and franchise:
Companies like Pizza Hut Operate under this model.
(7/23)
Some QSR Brands in India
1. Dominos
2. Pizza Hut
3. Mcdonalds
4. KFC
5. Subway
6. Barbeque-Nation
7. Wow Momos
(8/23)
1. Dominos
2. Pizza Hut
3. Mcdonalds
4. KFC
5. Subway
6. Barbeque-Nation
7. Wow Momos
(8/23)
Now that we have ascertained that QSR is a growing space.
We now come down to analyzing Restaurant Brands Asia(RBA) aka Burger King
(9/23)
We now come down to analyzing Restaurant Brands Asia(RBA) aka Burger King
(9/23)
Restaurants Brands Asia(RBA):-
The national master franchise of the BURGER KING brand in India, with exclusive rights to develop, establish, operate and franchise Burger King branded restaurants in India.
(10/23)
The national master franchise of the BURGER KING brand in India, with exclusive rights to develop, establish, operate and franchise Burger King branded restaurants in India.
(10/23)
RBA has been one the fastest-growing QSR brands over the last 5 years
From about nearly 50 stores in FY16.
The brand has grown to about more than 500 stores in the last year.
(11/23)
From about nearly 50 stores in FY16.
The brand has grown to about more than 500 stores in the last year.
(11/23)
Model Followed by RBA:-
The model followed is same as that of McDonalds.
Open up restaurants in Porsche locality and have ample seating space.
This means store development costs run pretty high for RBA.
(12/23)
The model followed is same as that of McDonalds.
Open up restaurants in Porsche locality and have ample seating space.
This means store development costs run pretty high for RBA.
(12/23)
Pan India Operating Agreement:-
RBA has a pan India operating agreement.
Therefore it gives the company the opportunity to open stores across the country.
Unlike Westlife development which can operate only in the west RBA can be a real proxy to the QSR consumption.
(13/23)
RBA has a pan India operating agreement.
Therefore it gives the company the opportunity to open stores across the country.
Unlike Westlife development which can operate only in the west RBA can be a real proxy to the QSR consumption.
(13/23)
Entry in Café segment to drive Gross Margin expansion
After the soft launch of the first BK Café in 2QFY22, the company opened 35 new BK
Cafés in FY22 and 51 new BK Cafés in Q1FY taking the total count to 86 Café’s
BK cafes have higher gross margins.
(14/23)
After the soft launch of the first BK Café in 2QFY22, the company opened 35 new BK
Cafés in FY22 and 51 new BK Cafés in Q1FY taking the total count to 86 Café’s
BK cafes have higher gross margins.
(14/23)
Continuous improvement in Gross margins:-
One of the most imp parameters in QSR is gross margins
As the company continues to stabilize the stores...the gross margins have continued to improve.
(15/23)
One of the most imp parameters in QSR is gross margins
As the company continues to stabilize the stores...the gross margins have continued to improve.
(15/23)
The takeover of Burger King Indonesia:-
Indonesia is the 4th most populated country in the world with ~57% urbanization.
RBA has taken over the operations of Indonesia Burger King.
RBA is working on turnaround of this business.
(16/23)
Indonesia is the 4th most populated country in the world with ~57% urbanization.
RBA has taken over the operations of Indonesia Burger King.
RBA is working on turnaround of this business.
(16/23)
Turnaround in Indonesia:-
RBA targets expansion of Burger King stores from 177 stores in FY22 to 330 stores by Mar’26
RBA targets a 60% gross margin (56.7% in CY’19) for FY23 with a focus to achieve 100% ADS recovery
driven by aggressive marketing campaigns.
(17/23)
RBA targets expansion of Burger King stores from 177 stores in FY22 to 330 stores by Mar’26
RBA targets a 60% gross margin (56.7% in CY’19) for FY23 with a focus to achieve 100% ADS recovery
driven by aggressive marketing campaigns.
(17/23)
India Expansion plans:-
RBA has laid out a well-defined store
expansion strategy to achieve store count of 700 by CY26 for Burger King.
RBA also wants to continue to improve its gross margins.
(18/23)
RBA has laid out a well-defined store
expansion strategy to achieve store count of 700 by CY26 for Burger King.
RBA also wants to continue to improve its gross margins.
(18/23)
Risks:-
1. Turnaround of Indonesia Business is the key to the prospects of RBA
2. QSR is a highly competitive space...with constant innovation in
3.High real estate costs continue to be a big concerns
4. Continues losses can lead to an increase in debt.
(19/23)
1. Turnaround of Indonesia Business is the key to the prospects of RBA
2. QSR is a highly competitive space...with constant innovation in
3.High real estate costs continue to be a big concerns
4. Continues losses can lead to an increase in debt.
(19/23)
Valuation:-
Both on EV/Sales and EV/EBIDTA the comapny has lowest multiples.
However given the losses the company makes....one must be careful in the comparison
(20/23)
Both on EV/Sales and EV/EBIDTA the comapny has lowest multiples.
However given the losses the company makes....one must be careful in the comparison
(20/23)
Conclusion
RBA has immense potential:-
1. India business has room for a lot of growth
2. BK Cafe ramp up will help gross business
3. Indonesian business is a key monitorable.
RBA seems a good play to the QSR space however progress must be monitored.
(21/23)
RBA has immense potential:-
1. India business has room for a lot of growth
2. BK Cafe ramp up will help gross business
3. Indonesian business is a key monitorable.
RBA seems a good play to the QSR space however progress must be monitored.
(21/23)
Stay tuned for more posts where we sectoral trends in depth
We will analyze more QSR companies Like Dominos,Pizza Hut shortly.
Follow me @AdityaD_Shah for more such insights into personal finance,equities etc.
(22/23)
We will analyze more QSR companies Like Dominos,Pizza Hut shortly.
Follow me @AdityaD_Shah for more such insights into personal finance,equities etc.
(22/23)
Disclaimer:-
This is my study
Not an Investment Advise
Please consult your own investment advisor before investing.
(23/23)
This is my study
Not an Investment Advise
Please consult your own investment advisor before investing.
(23/23)
Loading suggestions...