BK Looks to IPO, Continued Turnaround

Discussion
Feb 28, 2006
George Anderson

By George Anderson


Burger King has made slow and steady improvement over the past couple of years under Greg Brenneman, so what does the future hold for the fast food chain beyond its planned initial public offering?


During Mr. Brenneman’s tenure leading the fast food chain, Burger King has gone from losses and failing franchisees to a profit and a sense of optimism. The chain has rolled out successful new products such as its TenderCrisp chicken sandwich, chicken fries and Angus burger, and attracted attention with its plastic head Burger King character commercials.


The company, according to Thomson Financial, is looking to raise up to $400 million with its initial stock offering. What is not known is how many shares the company will put up for sale or at what price.


One of the points of concern for Burger King has been the amount of debt it has taken on.


Alan Vituli, CEO of Carrols Corp., Burger King’s largest franchisee with 350 restaurants, told The Associated Press he also was concerned about the debt but the company was performing well enough to handle it and continue investing in the business. 


Moderator’s Comment: Has Burger King made enough progress to conclude it has turned its business around? What will the company’s IPO mean for Burger
King and its franchisees going forward?


Kathleen Smith, a principal and IPO analyst for Renaissance Capital, told The Associated Press she wasn’t ready to predict how well Burger King’s
stock sale would go but did say, “It’s a good time for a fast-food chain or restaurant chain to go public.”

George Anderson – Moderator

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5 Comments on "BK Looks to IPO, Continued Turnaround"


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Mark Burr
Guest
15 years 7 days ago

Maybe with an influx of capital, they can invest in an offering of a better cup of coffee. It’s one item alone that caused my return for an occasional cup at McD’s, especially while on the road. BK is lacking greatly at maintaining an up to date offering in coffee, not to mention everything else. Maybe this IPO can help? Sounds silly? Yes, it might be. But coffee is an entry item. It’s kept me away from them at breakfast as well as, I am sure, many others. One small thing can have a great impact.

Stephan Kouzomis
Guest
Stephan Kouzomis
15 years 7 days ago

Gene brings up some very strong points.
It is interesting how McDonald’s and Wendy’s is flooding the market with new products, and a couple of new formats.

If BK’s balance sheet allows it to stay in line with its competitors – i.e. new products, formats, advertising expertise, services to consumers – then this IPO could have legs, if you will.

My concern is, does BK have the marketing savvy and clout to rebuild its consumer loyalty base and franchisees’ patience and support? Hmmmmmmmmmm

Mark Lilien
Guest
15 years 7 days ago

Burger King’s latest management group is certainly more skillful than some of the old regimes. Going public would not have been possible a few years ago, based on the earlier problems. They have a long way to go, however, if their goal is to become dominant. I doubt that they are top of mind for most fast-food customers. But they are the poster child for better health through improved execution.

James Tenser
Guest
15 years 7 days ago

BK’s situation has certainly improved under Brenneman’s stewardship. I’m not partial to the creepy, masked King character of its recent ad campaign but, then again, Ronald McDonald’s kinda weird too.

This is a company that has been hampered by its historical position as a unit of a much larger company, Diageo (formerly Grand Metropolitan PLC). At one time, Burger King’s sister companies included Pillsbury, Pearle Vision Centers, and a huge string of pubs in England. Establishing BK’s own identity seems strategically sound.

So is going to the public well at this time. The company has invested heavily in advertising in the past half year. It is posting positive numbers, as are its franchisees. Share prices in its category are up. What would the company do with the extra shot of capital? Eclipse McDonald’s? Hardly likely. But with 11,000-plus stores, it may continue to offer a popular alternative.

The acid test here: Do big franchisees, like Carrols Corp., buy in to the IPO?

Gene Hoffman
Guest
Gene Hoffman
15 years 7 days ago

The Burger King IPO, gazing up at thee

May not be what it purports to be.

Says McDonald’s in one paragraph,

There is no clamor for a BK draft.

For fast foods, burgers and parsley

“Stick with us,” Mac said gharshley.

But the BK has taken on lots of debt

And an IPO will eliminate that fret.

So “Good luck,” renewed Burger King

May improvements make registers ring.

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