Burger King's Expansion Plan In Africa Looks Lucrative

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Mar 20, 2015

Burger King Worldwide Inc. (BKW, Financial) is a global chain of hamburger fast-food restaurants, headquartered in Miami-Dade County, Florida, United States. Burger King has been on a rapid expansion mode in the last decade, changing its business model and restructuring its methods of fast food making. The company’s rapid international expansion with the help of numerous franchises has now led the burger giant to focus on Africa, which is a growing market for all kinds of globalized businesses.

In 2007, the first Burger King to be opened in the African continent was in Egypt, and since then outlets have opened in South Africa and Morocco, where the franchise has commenced an agreement to open stores at certain Sasol filling stations.

Eyeing to capture the African market

Burger King Worldwide has announced its expansion into a number of new African countries by the end of this year, in order to keep up with the demand for fast food rushes, as well as with tough competition.

The company operates the South African unit with Grand Parade Investments Ltd., the Johannesburg-based leisure company, and the unit has acquired rights to open outlets in Botswana, Zimbabwe, Namibia, Zambia, Mozambique and Mauritius. The company is also currently trying to procure permission to open stores in Africa’s second-biggest oil producing country, Angola.

Burger King South Africa is planning to build drive-through in parking lots, with a few of those under construction, and seeking necessary approval for the same from increasing number of shopping-centre owners. The company is also contemplating the addition of breakfast meals, home delivery and 24 hours service in its fast food management system.

The maker of the Whopper burger has outlets in three of South Africa’s nine provinces and by early 2016 it intends to open stores in at least four more provinces, including the Eastern Cape.

The burger giant has also hinted that it could be doubling the number of stores in South Africa, from 30 to 60, by the middle of this year.

Expansion and aftermath

This expansion from Burger King comes during a time when other international food giants are looking at tapping the fast food market in the growing continent. McDonald's (MCD, Financial) indicated in early 2014 that the African market, particularly with respect to Nigeria, was up for consideration by the fast food restaurant chain’s management. Analysts opine that there would be fierce competition in the scene going forward, with more rivals pouring into the continent.

According to Jaye Sinclair, chief executive officer of Burger King South Africa, even if there is immense potential to open as many as 200 to 250 outlets in South Africa within the next two years, the company will most likely move at a gradual pace.

With the steady increase in the number of middle class consumers in the continent, where the number of middle-class households has supposedly tripled since 2010, there are great prospects of generation of capital and jobs from the fast-food market. Restaurant chains, retailers and consumer-goods companies are foraying into sub-Saharan Africa, where statistically, the average age of consumers is comparatively low.

To conclude

According to Burger King, its African expansion plans are progressing at a very strong rate, but it remains to be seen if the company can hold ground amidst strong and stiff competition from other players. Let’s keep an eye on how Burger King’s expansion plan takes final shape in the African continent and ultimately attributes to increase the sales chart of the fast food giant.