Global burger chains seek PE appetiser before India push

International burger chains such as Carl’s Jr, Wendy’s, Dairy Queen and Johnny Rockets are seeking to raise funds from private equity (PE) players to launch or expand their India business.

US-based Carl’s Jr, which has entered India through franchise partner Cybiz Bright Star Restaurants, is planning to offload around 26 per cent stake to PE players for funds.

The chain plans to open 100 stores in India in the next five years.

“Burgers have become a staple food, and is already flagging off a food revolution in India. Considering that most new players want to grow fast, including us, there will be more private equity investments in this category,” said Samir Chopra, Group Chairman, Cybiz Corp.

The burgers at Carl’s Jr would be 30 per cent more expensive than the existing Mc Donald’s range. The first outlet is expected in Delhi early next year.

Though McDonald’s and KFC may be the top two burger sellers in India, there is still scope for more players in the country’s ₹1,000-crore burger market, say industry experts.

“If McDonald’s joint venture partner Vikram Bakshi can ask for ₹2,500 crore for his 50 per cent stake, it shows the valuation of the burger business in India,” said Chopra. Recently, US-based multinational Burger King, backed by PE player Everstone Capital, opened two outlets in India in another indication of global chains’ enhanced interest in Indian market.

“Burgers have caught the fancy of PE players, and Everstone bringing in Burger King to India is a case in point. We intend to raise about ₹60 crore from PE players,” Chopra added.

Another US-based gourmet burger brand, Johnny Rockets, is also in the process of raising money from PE funds through its franchise company in India, Prime Gourmet. Having launched some of its outlets in the national capital region (NCR), the firm has now appointed Mumbai-based Lodha Capital, an investment bank, to explore PE funding.

“We have been mandated to raise PE funds for Johnny Rocket, which has three outlets in the NCR. The burger category in India is under-penetrated due to which most international chains want to come here,” said Siddharth Bafna, Head of Corporate Finance and Transaction practice, Lodha & Company.

Market leader Mc Donald’s is already funded by Arisaig Partners, which has bought a 3.47 per cent stake in Westlife Development that controls Mc Donald’s restaurants in west and south India through its direct subsidiary, Hardcastle Restaurants.

The potential is huge. “Even if we assume two outlets for every one million people, India has the potential for at least 2,500 outlets compared with the current 700-odd outlets,” said Bafna.

COMMENT NOW