Maine news, sports, weather from Portland Press Herald / Maine Sunday Telegram, Portland, Maine

Burger King sale may help chain bulk up overseas

The purchase by an investment group is expected to fuel the company's foreign growth.

The Associated Press

CHICAGO - Burger King's new ruler could help its empire expand.

click image to enlarge

More than a third of Burger Kings are outside the U.S., and that number is likely to rise under new ownership.

The Associated Press

Select images available for purchase in the
Maine Today Photo Store

Burger King Holdings Inc. sealed a deal Thursday to sell itself for $3.26 billion to 3G Capital, an investment firm with strong ties to Latin America. The fast-food chain's chairman and CEO, John Chidsey, said the deal will help it expand more rapidly overseas.

Chidsey, who will become co-chairman of the company after the tender offer is complete, said the $24-per-share deal also brings 3G Capital's experience and contacts abroad. "Hopefully they'll be able to even provide more of an accelerant to the fire," he told The Associated Press.

More than a third of Burger King's locations are outside the U.S. That's growing as the company shifts its expansion focus to other countries. In the past year, 90 percent of its new locations were built abroad.

Burger King's headquarters will remain in Miami. It has more than 12,100 locations around the world and perennially lags its far larger competitor McDonald's Corp.

Its biggest problem: high unemployment among its most important, but notoriously fickle, group of customers -- young men between 18 and 34, whom it has targeted with big burgers like the 930-calorie BK Quad Stacker and edgy ads featuring the King character.

But there are deeper reasons for five consecutive quarters of declines in sales at locations open at least a year.

Burger King's once-unique concept of flame-broiled burgers isn't so rare any more, thanks to a boom in gourmet hamburgers from smaller competitors such as Five Guys and Culver's. And its profits suffer from trying to match McDonald's super-low prices, which has angered franchisees.

Analysts say Burger King needs a new approach with the help of its new owner, including becoming more efficient and differentiating itself from McDonald's by creating new menu items that will keep its customers coming back.

It's already had some success with its BK Ribs, which even at a high price of $7 for an eight-piece order, sold out earlier than expected this spring. The company's also changing its breakfast menu.

The company needs to work with its large group of franchise owners to brighten locations, UBS analyst David Palmer said. That will take time and money.

Burger King will likely need the support of that base of franchise owners, who own most of its locations in the U.S. and with whom the restaurant chain has squabbled over its discounts.