Hi fellow investor,
( Disclosure: I own shares of RBA and hence my views maybe biased. Everything I conclude in the article is solely my opinion, based on publicly available information. This should not be taken as financial advice. This is purely for educational purpose.)
Let’s get straight into it.
Short background, to start with!
Restaurant Brand Asia (“RBA”) holds the national master franchise for Burger King in India and Indonesia till 2039, as well as Popeye’s in Indonesia. QSR Asia Pte Ltd holds 15.47% stake in RBA (as of Sept 23). QSR Asia was incorporated in 2013, and opened the first Burger King outlet in India, in November 2014. As of June 2023, RBA has 396 Burger King Outlets in India, as well as 169 outlets of Burger King and 10 Popeye’s, in Indonesia.
F&B Singapore (“Everstone Capital”) owns 86.93% and Burger King Asia Pacific owns 11% of QSR Asia Pte Ltd, respectively. Everstone Capital is a PE fund with multiple business interests including credit, real estate, and the fast food industry. The PE fund has under its control various fast food brands like Harry’s in Singapore, Domino’s in Indonesia, Pind Balluchi, Blue Foods and Burger King in India. The fund typically has an average holding period of 7 years, after which they look to divest their stake. QSR Asia partially divested its stake in RBA, via an IPO, in December 2020. QSR further sold 25% of its stake in RBA, through open market in Sept 23 (more on this later).
According to the Master Franchise & Development Agreement (MFDA) signed with Restaurant Brand International Inc (parent of Burger King Corporation), RBA needs to open at least 700 restaurants by December 2026. The management says the target was set after mutual discussion with Burger King, and comprehensive total addressable market surveys. They also point out that they won’t be stopping at the 700 mark, as the food services industry in India will continue to grow in the years to come.
India’s per capita spend on Food Services is one of the lowest among the emerging economies.
India also has the second largest urban population in the world, at 472 million, second only to China. This number is only going to increase with rising urban development in the country.