Burger King Worldwide, Inc.
) has been undertaking a series of initiatives such as unit
expansion, reimaging, closure of underperforming units and
several other initiatives to improve brand recognition.
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Recently, Burger King announced that it is set to unveil three
restaurants in Martinique, an island in the eastern Caribbean Sea
in an overseas region of France. The new restaurant launch is
also part of the company's brand-building efforts. In
collaboration with its franchisee partner, ADM Food Services,
these three restaurants are slated to open in Le Lamentin,
Fort-de-France and Guadeloupe in April, September and December
Burger King intends to capitalize on ADM Food Services' extensive
knowledge of the local market to expand its flame-grilled
hamburgers, chicken and other specialty sandwiches, French fries,
soft drinks, and other food offerings in the market. It also
plans to open four additional restaurants in the French Antilles
by the end of 2015 in partnership with ADM Food Services.
Moreover, it intends to work with the franchisee to set up the
supply chain in Martinique, Guadeloupe and French Guyana to
establish its restaurants across the territories over the next
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, Central America, South Africa, Singapore,
Malaysia, Korea and Vietnam.
We believe franchising a large chunk facilitates 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. Moreover, since a major portion of its business is
franchised, Burger King is less likely to be 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 and 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.
Jack in the Box Inc.
Brinker International, Inc.
). While Famous Dave's of America and Jack in the Box sport a
Zacks Rank #1 (Strong Buy), Brinker International holds a Zacks