General Atlantic, Advent In Advanced Talks To Buy Everstone’s Burger King India Stake

Private equity (PE) firms General Atlantic and Advent International are reportedly close to acquiring Everstone Capital’s stake in Restaurant Brands Asia (RBA), which operates the quick service restaurant (QSR) chain Burger King in India.

Everstone Capital holds a 40.9% stake in RBA and was responsible for bringing Burger King to India in 2014.

Per an ET report citing PE firms’ executives, Everstone is looking to cash out on its stake in Burger King and is now engaged in due diligence with General Atlantic and Advent. To be sure, Everstone also operates Subway India and Lavazza Coffee in India.

Burger King and its coffee and beverage sub-brand BK Cafe together have nearly 400 stores in India as of March 2023.

The due diligence also comes at a time when the growth of Western fast-food brands has slowed down amid a growing customer sentiment in favour of regional brands and Indian startups.

In a post-earnings note on May 18, brokerage firm ICICI Securities wrote, “Key risks to RBA are slower-than-expected improvement in customer footfalls, delays in store expansion plans and increased competitive intensity in the north and east markets.”

For some context, RBA reported a loss of INR 73.3 Cr for the March 2023 quarter, up 9.4% from INR 67 Cr loss in the year-ago quarter, impacted by food inflation and the opening of newer stores. At the same time, revenue from operations grew 28% year-on-year (YoY) to INR 514 Cr.

At the same time, rival Devyani International, which operates KFC and Pizza Hut in India, reported a 21% decline in net profit during the March quarter.

Feeding India’s Increasing Appetite For Fast Food

However, QSR chains have said they will continue to escalate store expansion despite the stiffer competition, led by opportunities in small towns, along highways and emerging channels such as convenience stores at petrol stations.

Credit rating agency ICRA also said in a recent report that the top five chains in India’s QSR industry could add nearly 2,300 stores across the country between FY23 and FY25, spending INR 5,800 Cr in the process.

“ICRA expects capex of ~INR 5,800 Cr (excluding refurbishments) in FY2023-FY2025, almost twice the level seen in the last three years ending FY2022,” said the agency in the March 2023 report. 

The report added that the average daily sales of these brands had gone from INR 67,479 in FY21 to INR 85,789 in FY22, improving further to INR 97,696 in the nine months ended December 31, 2022.

The ICRA report took into account Jubilant FoodWorks (Domino’s India), Devyani International (KFC, Pizza Hut), RBA (Burger King), Sapphire Foods India (franchisee partner of KFC and Pizza Hut) and Westlife Foodworld (McDonald’s West and South).

The development comes after Jubilant FoodWorks said that Domino’s India was getting its tech integrations in place before starting to take orders on the government’s digital commerce network, the Open Network for Digital Commerce (ONDC), joining McDonald’s on the network.