2nd Week Whopper to go

[아무개]

Whopper to go

Sep 1st 2010, 17:40 by The Economist online | NEW YORK

SHARES in Burger King soared on September 1st, on reports that the fast-food company was talking to one or more private-equity firms interested in buying it. How much beef was behind these stories was unclear—but something needs to be (well) done. Lately the company famous for the slogan, “Have It Your Way”, has certainly not been having it its own way in the long running “burger wars”. The jury may still be out on whether BK or McDonald’s serves up the best fries, but when it comes to popularity with stockmarket investors, the maker of the Big Mac has supersized its lead in the past two years.

Recession has favoured McDonald’s over BK, whose share price has halved since the economy was flame-grilled in the summer of 2008. The happy meals have been enjoyed by investors in McDonald’s, whose share price has risen during this period, reaching an all-time high in August. Same-store sales at BK have fallen for five successive quarters. Why has McDonald’s been eating its lunch? Among other things, BK has always had a higher proportion of sales to younger men, who have been hit especially hard by the recession, while McDonald’s has been broadening its appeal for several years with initiatives like serving relatively healthy salads and decent coffee. BK has struggled to follow suit, while having to contend with shareholders’ anger as the rising cost of beef and other ingredients hit profits. It may also have cannibalised its existing sales by offering value meals that were a bit too irresistible.

BK is used to changes in ownership. For much of the time it struggled as it went from being part of Pillsbury, a food company, to Grand Metropolitan, a British conglomerate, then to Diageo, a drinks giant. In 2002 it was sold to a consortium of private-equity investors: TPG, Bain Capital and Goldman Sachs. They did a decent job, improving sales with better marketing, including reviving the “Have It Your Way” slogan. They also helped to turn around the most troubled of the franchisees who operate the vast majority of the 12,000-plus Burger King restaurants in 73 countries. The firm’s bosses may now hope that returning BK to private ownership would protect it from the short-term pressures of the stockmarket while it figures out and invests in a new strategy to beat Mickey D.

If Burger King does go private, it may be part of a trend in the private-equity industry—now that some of the bigger firms have rediscovered their appetite for deals—of gobbling up the companies they had taken public during the bubble years but which are now trading cheaply. TPG, Bain Capital and Goldman Sachs still own a sizeable stake in BK, despite listing it on the New York Stock Exchange in 2006. However, it seems that other private-equity firms are interested in buying it, including, it is reported, 3G, a New York-based firm. If that happens, no doubt Burger King servers will appreciate the irony: the act of passing a company from one private-equity firm to another is known in the business as “flipping”.