US Burger King investing in Cape Town


By Thandisizwe Mgudlwa

It has been dupped as the ‘Grand plan for Burger King’.

A recent announcement by Cape Town-based empowerment company Grand Parade Investments (GPI) to shift into quick service restaurants (QSR) through a joint venture with US fast food heavyweight Burger King is not entirely unexpected…for several reasons, the groups says.

Firstly, GPI’s prime mover Hassen Adams has roots in the food sector that have played key roles in setting up Squires and the Cape Town Fish Market.

Secondly, the potential roll-out of Burger King outlets in the Cape (and then the rest of South Africa) will not be terribly different from GPI’s roll-out of its Limited Payout Machine (LPM) gaming interests throughout pubs and restaurants in the Western Cape. GPI has also previously worked well with an international partner, remembering the company’s involvement with the LPM roll-out involved working closely with the Tatts Group – a global player in the gaming sector.

Thirdly, the broader food sector targets the same discretionary spend as GPI’s core gaming interests.

Fourthly, GPI has a strong balance sheet that is able to accommodate an investment that notches up succulent returns on a quick roll-out –provided, of course, if Burger King gets a strong reception from the Cape’s growing middle class.

“It is worth noting that GPI is very much the senior partner in terms of funding the roll-out of Burger King outlets – perhaps the price for securing an exclusive long-term master franchise agreement for one of the best known fast food brands in the world.

“This year will, indeed, be a key year for the Burger King initiative.
GPI intends opening its first restaurant in Adderley Street in central Cape Town during the first half of 2013.

It seems the Burger King pitch is hinged on pricing and offering a healthier menu in that the fare is flame grilled rather than fried.

GPI chairman Hassen Adams has indicated that Burger King’s prices will appeal to South Africans who have previously found healthier quick service restaurants’ brands unaffordable.

What local business will also find fascinating to follow in 2013 is whether GPI will become a property owner (and rent collector) in developing its own Burger King sites, or whether the franchise will simply be rolled out where appropriate retail space can be found?

“In this regard it will also be interesting to see whether GPI’s relationship with Sun International will offer opportunities to set up Burger King outlets inside casinos, where the footfalls of hungry punters are plentiful.

Perhaps even more intriguing for the year ahead is whether GPI has the appetite to build a multi-brand food business, considering the company has formed a separate subsidiary called GrandFoods to house the Burger King venture.

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