Can Burger King Do Better in India Than in China?

24/7 Wall St.

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Burger King Worldwide Inc. (BKW) has announced a new joint venture that will give it an opening into the giant market of India. The fast-food chain has partnered with Everstone Group to develop the Burger King brand presence in India. The move is a challenging one, considering that India’s markets remain in turmoil despite huge growth opportunities. Then there is that entire “no beef” and even “no meat” issue in India as well.

The question to ask is whether Burger King can succeed in India when it made so small a splash in mainland China.

Everstone is a private equity and real estate firm in India and South East Asia. The two companies signed a long-term master franchise and development agreement, and this gives Everstone sub-franchise rights for all of India. Under the agreement, Everstone will work together with BK AsiaPac in the coming months to set up the supply chain in India. The two will also execute a rollout plan to establish Burger King restaurants across the country.

Everyone knows that India is a huge market. It is also a very complicated market. The CIA World Factbook has the population at 1.22 billion as of July 2013, only about 100 million short of China. The same source projects that per capita gross domestic product (GDP) is only $3,900 on a purchasing power parity basis. Unfortunately, almost 30% of the population is below the poverty line, and some may argue that it is even worse than that.

Burger King has yet to enter India. Everstone has the equivalent of about $2 billion under management, and it has been in business since 2006. It is one of the largest developers of shopping malls and industrial warehouses in India. The thing to consider is that Burger King is the second largest fast-food hamburger chain in the world, operating in some 13,000 locations. It claims to serve more than 11 million guests per day in 91 countries and territories around the world.

Can India work better for Burger King than China? Forbes covered the China market for Burger King in March of this year and the effort has hardly been noticed. Forbes said, “Eight years after Burger King first entered the China market in 2005, the world’s second largest burger chain restaurant has only 63 restaurants in the country, falling far short of its own plan of opening 250 to 300 restaurants by 2012.”

We will have to see how much this matters in action rather than in theory. If Burger King is claiming to operate in more than 13,000 locations globally and has this few locations in China, the company will have to prove its effort in an even more complicated market like India before it gets any praise.


Filed under: Retail Tagged: BKW

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