Burger King IPO kicks off: Why you should subscribe it

Burger King India’s IPO for Rs 810 crore initial public offer (IPO) kicked off today and was fully subscribed within just two hours. The issue, which is being sold in Rs 59-60 range, consists of a fresh issue of Rs 450 crore and an offer for sale (OFS) of up to 6 crore shares, aggregating Rs 360 crore at the upper limit of the price band.

The QSR chain that entered India on November 11, 2013 is running 259 company-owned Burger King restaurants and 9 sub-franchised Burger King restaurants, of which 249 were operational as of November 25.

With benefits of exclusive master-franchise rights, negative working capital, strong growth and expansion plan, the burger chain has the master franchisee arrangement (with long term rights till Dec 31, 2039), shared Anand Rathi.

“Focusing on convenience and accessibility, the company’s restaurants primarily operate in four different formats - high street locations, shopping malls and food courts, drive thrus and transit locations. The company is one of the fastest growing international QSR chains in India during the first five years of its operations based on number of restaurants,’ it added.

Also Read: Burger King India files IPO papers, to raise ₹ 542 crore

Here are five reasons why you should subscribe to Burger King IPO:

Strong franchise agreement: Burger King India is the national master franchisee of the Burger King brand in India, with exclusive rights to develop, establish, operate and franchise the restaurants in India. The master franchisee arrangement, which expires on Dec 31, 2039, allows the company to use Burger King’s brand name to expand business in India, while leveraging the technical, marketing and operational expertise associated with the global Burger King. Also, the agreement provides flexibility to the company in terms of tailoring the menu, promotions and pricing to the Indian tastes and preferences while complying with Burger King global quality assurance standards. Further, the company benefits from Burger King’s extensive global marketing and advertising concepts, product development capabilities and cooking techniques to drive sales and generate increased restaurant footfalls.

Driven by variety and value: Focusing on quality, consistency and products made as per the Indian taste, the whopper chain also offers product at competitive rates which is feasible for everyone. It has also created value for money options under Rs 100. In terms of variety, the company offers 18 different vegetarian and non-vegetarian burgers covering both value and premium offerings. Apart from burgers, Burger King menu includes wraps, rice, beverages, sides, snacks, shakes and desserts.

High on expansion: Burger King that entered in India in 2013 always focused on building restaurants quickly and efficiently. With an aim to compete with other global brands that were already present here in India, it became one of the fastest brands in India to reach 200 store counts in just five years. The brand has a well-defined new-restaurant roll out process that helps to identify locations and build out restaurants quickly, consistently and efficiently. It aims at building restaurant brand across– high street, malls and food courts, drive thrus and transit locations, and look at factors that would drive footfalls.

Efficient backend: Under its established supply chain model, Burger King has well-managed suppliers that provides ingredients and other raw materials to the burger chain. Most of the ingredients are purchased locally from known suppliers that comply with Burger King’s food quality standards. Notably, Burger King India has an extensive service level agreement in place with third-party distributor – ColdEx to procure ingredients and packaging materials from the company approved suppliers. This arrangement gives the company access to ColdEx’s multiple warehousing space and extensive logistics network across the country, thereby supporting the company’s cluster approach and penetration strategy in a cost effective manner and helps in lowering costs and achieve further economies of scale through operational leverage.

Must Read: Burger King India gets SEBI's green signal to float IPO

Experienced management team: “The management team of Burger King India includes former senior employees who have significant work experience in the food and beverage (F&B) industry, retail and major fast moving consumer goods brands. Shivakumar Pullaya Dega, Chairman and Independent Director of the company, has significant experience in food and beverage industry and mobile industry. Also, Rajeev Varman, the Chief Executive Officer and Whole Time Director of the company, has over 20 years of work experience in F&B industry. Prior to joining the company, he has worked with Tricon/Taco Bell brand, Lal Enterprises Inc., and Burger King Corporation where he held the positions including franchisee business manager, national manager–franchise operations, vice president and general manager, Canada and vice president & general manager, Northwest Europe. Further, a large number of the senior management personnel of the company have considerable experience, resulting in effective operational coordination and continuity of business strategies,” Rathi added.