3G Capital buys out Burger King

September 3rd, 2010 - this article is free to republish with open public license

Over the years investment firms have bought a lot of things to make money. Entire neighborhoods in New England were bough up, to be rented out. A trend can be reflected in any company that changes ownership, the new proprietors really need to see the company in action and be aware of vital dynamics. 3G Capital is now getting into the hamburger business, will they actively modify the company or stay the course with existing policies?

Prediction: a few business suits will have unrecoverable sauce and grease stains.

Hamburgers usually contain the absolute leftovers from a cow, and french fries also contain enough raw calories for an arctic expedition. Perhaps they will introduce soy / legume / veggie burgers that have the protein of meat. It is inexpensive, healthy, and delicious if done properly. Perhaps 3G Capital will be progressive, hopefully they keep the onion rings.

Maybe the Kid Valley options like garlic fries, or sweet potato fries need to be standard at every fast food place.

CBS – Under the terms of the deal with 3G, Burger King’s Chairman and CEO John Chidsey will become co-chairman of the board. 3G Managing Partner Alex Behring will be the other co-chairman.

Burger King, with its 12,100 locations around the world, lags its far larger competitor McDonald’s Corp. , and has struggled to keep up with its rival during the economy’s rollercoaster of the past two years.

Among the biggest problems: high unemployment among its most important, but notoriously fickle, group of customers: young men between 18 and 34.

It’s more than the bad the economy that’s led to five consecutive quarters of declines in an important performance measure of sales at locations open at least a year.

Burger King’s once-unique concept of flame-broiled burgers isn’t so rare any more, thanks to a boom in gourmet hamburgers from smaller competitors such as Five Guys, The Counter and In-N-Out Burger. And it’s hard for Burger King to make solid profits while competing with McDonald’s super-low prices.

McDonald’s is just eating their lunch, said Bob Goldin an analyst at the food consulting firm Technomic Inc. Burger King’s very heavily focused on a core audience of the younger male. And with that group, their attention goes to wherever has a better deal or whatever is hotter.

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Date September 3, 2010