Burger King Worldwide, Inc.
), recently unveiled its restaurant in Brunei Darussalam in
collaboration with its franchise partner Sinofood Express. This
marks the first Burger King outlet in Brunei, located on the
north coast of the island of Borneo, in Southeast Asia. Sinofood
will work with Burger King to open more restaurants across the
country over the next few years.
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Located in the heart of the city, this restaurant is expected to
witness a decent footfall, which will eventually drive sales.
Burger King intends to capitalize on Sinfood's extensive
knowledge of the local market to expand its Whopper sandwich and
other offerings in the market.
Burger King is looking to accelerate its presence in high-growth
potential international markets mainly through franchising. Of
late, the company has initiated ventures in key markets like
Russia, China, Mexico, France, Central America, South Africa,
Singapore, Malaysia, Korea and Vietnam.
We believe franchising a large chunk of its system facilitates
the company's earnings and return on equity growth by reducing
capital requirements. The company's franchised business model
allows it to generate strong free cash flow, thereby helping it
to maintain a healthy balance sheet. Since a major portion of its
business is franchised, Burger King is likely to be less affected
by inflation compared to its peers.
This Zacks Rank # 2 (Buy) company posted mixed fourth-quarter
2013 results in January with earnings beating the Zacks Consensus
Estimate while revenues missing the same. However, driven by net
restaurant growth and higher comps in the Europe, Middle East and
Africa and Asia Pacific regions, organic revenues grew 5.2%.
Some other stocks worth considering in the restaurant industry
Famous Dave's of America Inc.
Fiesta Restaurant Group, Inc.
Brinker International, Inc.
). While Famous Dave's of America and Fiesta Restaurant Group
sport a Zacks Rank #1 (Strong Buy), Brinker International holds a
Zacks Rank #2 (Buy).