Blog: Dean BestCould 3G Capital's next move be in foodservice?

Dean Best | 15 February 2017

Much of the chatter about where 3G Capital could look next has centred on packaged food - but might the private-equity fund be about to extend its foodservice empire?

Reuters this week reported Restaurant Brands International - the company behind Burger King and Tim Hortons and in which 3G holds a circa 40% voting stake - has approached US fast-food chain Popeyes Louisiana Kitchen over a possible deal.

An anonymous source is said to have told Reuters RBI and Popeyes have not yet agreed on a price. RBI is also said to have been looking at other targets.

3G bought Burger King in 2010 and then formed RBI in 2014 with the acquisition of Canada-based coffee-shop chain Tim Hortons.

Foodservice analysts see the benefits for RBI in moving for Popeyes.

"Popeyes is, right now, the 3rd largest chicken chain behind Chick-fil-A and KFC, and generally speaking, you won’t find many segments hotter than chicken," David Henkes, advisory group senior principal at US foodservice consultants Technomic, says. "Popeyes was up nearly 12% last year and has averaged double-digit growth over the past several years, so as a growth vehicle it’s been a strong performer. Its same-store sales have slowed a bit this year, however. They’re still very under-penetrated as well – they have fewer than half of the units in the US of KFC, and globally they’re not nearly as strong as KFC. US chicken seems to have resonance in other markets so it can provide a platform for international expansion that RBI seems to value highly."

Foodservice analyst Fahhan Ozcelik believes a takeover of Popeyes would be "a very good strategic move" for RBI.

"Burger King together with Tim Hortons are leveraging mainly G&A structure as well as benefiting from the two brands expansion through the international major franchise structure. Having a third brand not competing but completing the concepts with the addition of Chicken under Popeyes is definitely a plus for this strategy," he says.

There has been, of course, no word out of either company. But, as analysts speculate about 3G's next move in packaged food, perhaps one of its other major consumer-facing assets will first plump for Popeyes.

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