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25 Nov 2014

Where Menu is King


When Forbes India first visited Burger King in July this year, its office in Mumbai’s Lower Parel business district was a beehive of activity. Employees were busy scouting for locations, negotiating with suppliers, conducting blind tastings and fine-tuning the international hamburger chain’s India menu. At the time, the $1.1 billion (2013 revenues) global fast food giant was still a quarter away from launching in India, but the countdown had begun.
Link: http://forbesindia.com/printcontent/39047


Burger King has been keen on entering India since it was acquired by 3G Capital in 2010 in a $3.8 billion deal. “Any private equity player will be looking for rapid growth, and India would be an obvious market for a brand like Burger King,” says Devangshu Dutta, founder of Third Eyesight, a retail consultancy in Delhi. And the fast-food chain plans to be in India for the long haul. “Everyone has seen spends slow down in the last couple of years, but if you are entering a market with a 20-year time horizon, this slowdown is just a blip,” says Dutta.

At the time, Everstone Group had its hands full with the takeover of Blue Foods, now Pan India Food Solutions, which owns Copper Chimney, Noodle Bar and Bombay Blue, among other brands. Before it was acquired by Everstone, the restaurant chain had been burdened with heavy debt and high attrition. But it was in turning it around that Jaspal Singh Sabharwal, a partner at Everstone Group, saw an opening in the QSR arena. “We realised that there was room for a brand in the space, but what we needed was an iconic name,” he says.


Everstone was also aware that the Indian market had matured considerably since McDonald’s opened its first outlet in New Delhi’s Basant Lok market in 1996. At the time, most of its machines were imported, and even the fries and meats were flown in. It was only in 1997 that McDonald’s started taking its vendor development programme seriously. Today, all its products are locally sourced and manufactured.

In 2013, Everstone hired STEER Partners to introduce it to fast food players in Europe and the US, and talks with the parent company, Burger King Holdings Inc, began. That very year, the two firms agreed to enter into a joint venture to enable Burger King’s foray into India.

It was a win-win situation for both parties. Everstone, with its keen eye on real estate, helped the chain identify prime locations far more easily, and used its relationships with mall developers to get Burger King in. In Mumbai, for instance, the fast food chain will be opening an outlet in Phoenix Mills, a dozen metres from arch-rival McDonald’s. This would not have happened as easily without Everstone; after all, its Blue Foods had already leased the space.