New Delhi: Private equity firm Everstone Capital is planning to divest its nearly 41% stake in Restaurant Brands Asia, previously known as Burger King India, according to sources familiar with the matter. Discussions are underway with two other private equity firms, Advent and General Atlantic, regarding the purchase of Everstone’s stake in the company.
There have been speculations that Jubilant FoodWorks is also interested in acquiring the stake. However, when approached for comment, Jubilant FoodWorks dismissed these rumours as baseless. Restaurant Brands Asia declined to provide any comment on the matter, while Advent and General Atlantic were unavailable for immediate comment.
As per Thursday’s closing price of Rs 122.40 per share on the BSE, Everstone’s stake is estimated to be valued at nearly Rs 2,500 crore. Persons familiar with the situation claim that Jubilant FoodWorks is currently in the lead among the bidders, ahead of the Advent-General Atlantic consortium. The potential acquisition is viewed as a strategic move to bridge gaps in Jubilant FoodWorks’ portfolio, as it currently lacks a presence in the burger segment, which is dominated by Westlife FoodWorld, the operator of McDonald’s restaurants in the western and southern regions of India.
In the fourth quarter of FY23, Restaurant Brands Asia reported a wider loss, which was attributed to food inflationary pressures and the company’s expansion in India and Indonesia. Sachin Bobade, Vice President of Research at Mumbai-based brokerage Dolat Capital, stated that discretionary spending had been constrained in recent quarters due to inflationary pressures felt by consumers. Bobade also mentioned that Jubilant FoodWorks and Devyani International, which operates KFC restaurants in India, reported weak numbers in Q4, further reflecting concerns about a slowdown in discretionary categories.
During the March quarter, Domino’s Pizza, for example, witnessed a 0.6% decline in like-for-like sales, marking the first decline in at least seven quarters, according to industry experts. Jubilant FoodWorks’ investor presentation revealed that average daily sales amounted to Rs 81,430 in Q4 of FY23, compared to a high of Rs 86,945 in Q2 of the same fiscal year.
In contrast, Restaurant Brands Asia posted a year-on-year increase of 29% in topline, reaching Rs 514 crore in the March quarter. However, analysts tracking the company noted that total expenses also rose by 29% during the same period, dampening the impact of the revenue growth.
Currently, Restaurant Brands Asia operates 391 Burger King outlets in India, having opened 88 restaurants and closed 12 in FY23. The company aims to expand its total number of Burger King stores to 450 by the end of the current fiscal year, FY24.
