The World’s Most Important Emerging Markets

CASE Burger King® In 2016 Burger King Worldwide referred to hereafter as Burger King was the world’s largest flame-broiled fast-food hamburger chain. Figure 13.1 shows Burger King’s four geographic divisions in terms of the number of restaurants and amount of sales. The chapter’s opening photo shows a Burger King in Tokyo, Japan A BIT OF HISTORY Starting out as Insta-Burger King in 1954, the company grew to five restaurants in the next five years. In 1959, with its name shortened to Burger King, it began domestic franchising. Beginning in the early 1960s the company expanded internationally to the Bahamas and Puerto Rico Then it entered Europe, Asia, and Latin America in the 1970s. Since 1967, Burger King has at times been publicly owned, a divi- sion of other companies, a holding company owned by private equity firms, and a privately owned company. In fact, over a 20-year period it had seven different parents and corporate structures. The years of transformed ownership caused changes in its emphasis, and its inter- ests have sometimes been secondary to those of its parent company Nevertheless, some of its international moves tumed out to be highly Successful, and a few did not. It entered and then retreated from opera tions in such countries as Colombia, France, Israel, Japan, and Oman. (It has reentered some of these.) Much of Burger King’s early interna- tional forays came about either because someone in another country approached it or because a corporate manager was familiar with a particular country and thought it would offer opportunities. Its retreats have occurred because of not receiving adequate payments and because of having entered markets too small to support the recta infrastructure, such as slaughterhouse and beef-grinding facilities Over time, Burger King has taken a more systematic approach toward restaurant expansion. It still sees substantial U.S.growth op portunities but considers it to be a more mature market than other countries.

In seeking new places to enter, Burger King looks most fa vorably at countries with large populations (especially young people, high consumption of beef, availability of capital to franchisees for growth, a safe pro-business environment, growth in shopping on ters, and availability of a potential franchisee with experience and resources. Recently its model has been to grant franchise rights by pairing a private equity firm with an experienced restaurant operator in a joint venture (JV). In some cases, Burger King has become the third party in the JV without committing capital toit Overall, Burger King has expanded abroad later than is primary rival, McDonald’s. On the one hand, later entry is a drawback in very small markets due to an inadequate number of suppliers, such as only one slaughterhouse whose owners may be willing to work with more than one customer. On the other hand, Its later entry into larger markets allows Burger King to benefit from earlier entrants creation of product demand and a supply infrastructure. In Latin America and the Caribbean, McDonald’s and Burger King compete in almost all countries and territories, with Burger King Currently lead- ing in the number of restaurants in about half of those markets. Burger King’s Latin America and Caribbean group has many sparsely populated countries (0.9. the Cayman Islands, Aruba, and Saint Lucia) in which Burger King developed a presence long before e FIGURE 13.1 Regional Emphasis of Burger King Based on data from 2015 Burger ng 10K Report the a g Percentage of restaurants for 2013 and the 2014 Percentage of sales APAC 10 LAC 12% a nada EMEA 29 Unse Stand Canada 589 EMEA 26 United States and Canada Europe, Middle East and Africa (EMEA Latin America and the Caribbean (LAO Asia Pacific APAC United States and Canada Europe, Middle East and Aria EMEA Latin America and the Caribbean LAO Asia Pacific CAPAC CHAPTER 1) Country Evelion and see South Africa T on in Miami, which Because so many native which delaved its start of tranchang w more abundantly populated countries such Africa. The reason is largely due to its headquarters loca such as China, Russia mlwhich is often called the capital of Latin America caso many people from that region go to or through Miami, the King reputations over there early on, which simplified and recognition and acceptance. Further Miami’s earness Menerica and the Caribbean enhances the ability of Burger cutives and franchises to visit each other doing so finding potential gaining brand record Latin America and t King’s erecutives and fra ENTERING COLOMBIA AND FRANCE Colombia and political turmoil By the 2008, the cities we hela doing so, finding potential franchisees with sufficient financial and restaurant capabilities was difficult particularly since the franchise concept was rather new to China. Some of its competitors, mainly Brands and McDonald’s, madeint venture are Investments and expanded with owned stores) In 2012 Burger King entered a three- partner to serve the Chinese market. One partner, the Carpesian Capital Group, is a global private equity company specializing in de- veloping country Investments. The other is the Korduglu family from Turkey, which is Burger King’s largest non-US. franchisee King entered Colombia in the early 1980s but departed because In 2010 Burger King entered Russia, an attractive country not bian royalty expatriation restrictions and prolonged economic only because of its large population and growth potential, but also al turmoil. By the time Burger King reentered the country in because of integration possibilities with operations in Eastern Europe Indeed, Burger King entered Slovenia in 2011 and now depends on the cities were safe for people to go out to eat, the peso was supplies from the Russian operation. In addition, concluding the families had disposable income to eat out and all the maior essentiality of finding the right franchisee, Burger King’s managers had large new shopping centers with food courts. Although spent over a year getting to know the eventual franchisee, who owns – were unevenly distributed, the richest 20 percent of the popula a chain of about 200 Russian coffee shops. Although the franchise on almost 9 million people, had a per capita expenditure in 2007 of has resulted in growth in Moscow and St Petersburg, the franchise US$17,000. In addition, Burger King was able to sign franchise formed a J with Russia’s VTB Capital in 2013 to gain resources pists with two well-established and experienced companies needed to expand outside those cities. In 2014 India became Burger King’s 100 operating country.

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