Fast food company Burger King may float shares as early as next year as it returns to growth after years of restructuring, its top executive said on Monday, according to the Reuters news agency.
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The chain should also post its strongest gain in same-store sales since 1984 for the year to 30 June, chairman and CEO Greg Brenneman told Reuters.
“An IPO is the most likely exit” for the company’s current owners, said Brenneman, who was attending the opening of his first Chinese outlet, in the country’s commercial heart Shanghai.
“2006 would be the earliest, but by no means would I say that’s a definitive date,” he said. “he store count is taking off and is growing again for the first time in a long time.”
As part of an expansion drive, the US hamburger giant marked its late entry into a Chinese market dominated by McDonald’s and Yum Brands Inc.’s KFC, which have been slugging it out in the country for over a decade.
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By GlobalDataBurger King, which operates more than 11,000 restaurants in 65 countries, about a third of McDonald’s total, had suffered in recent years from a lack of clear identity in consumers’ minds and shaky franchisee relations.
The chain is now owned by private equity investors Texas Pacific Group, Goldman Sachs Capital Partners and Bain Capital, which bought the brand for about $1.5bn from British drinks giant Diageo Plc. in 2002. McDonald’s has a market capitalization of almost $36bn.
Prior to the buyout, the company suffered from a lack of direction that included an absence of major new initiatives — both at home and abroad — in the fast-changing and highly competitive industry.
After several years restructuring under new ownership, the chain, with $12bn in system sales for its last fiscal year, is now returning to growth, Brenneman said.
Burger King’s initial foray into China marks part of a global effort as its owners attempt to fatten the company for an eventual sale.
Brenneman acknowledged the late arrival to the market for the 51-year-old Burger King chain, but cited a Chinese proverb that goes: “He who comes last is often first.”
“It seems a couple of our competitors got here before us,” he said. “But make no mistake, we are here for the long term.”
McDonald’s already has more than 600 outlets in China, one of the world’s fastest growing fast-food markets, and is aiming for 1,000 stores by 2008.
KFC was the first major fast-food chain in China when it opened a store at Tiananmen Square in the late 1980s. It now runs 1,300 stores nationwide.
Yum, whose brands also include Pizza Hut and Taco Bell, has previously said its China unit makes up about 15 percent of total operating profit, with the number expected to grow to about 20 percent in the near term.
Burger King will take a go-slow approach to China, with plans to open about 10 stores in Shanghai over the next year, said Steve DeSutter, Burger King’s president for Europe and Asia.
Its trademark “Whopper” was selling for 10.90 yuan (US$1.32) on the first day of business in Shanghai’s upscale Jingan district.
“We want to evaluate the business economics before we talk about a bigger China plan,” he said. “There’s a lot of new life in Burger King, and this is just an extension of more of the same. We’re focused on growth, and Asia is a big piece of that.”
