Fast Food Chain Burger King May Be Sold

Burger KingBurger King (BKC), the nation's No. 2 burger chain, is reportedly in talks with private equity firms over a possible sale. Earlier today, The Wall Street Journal reported that one likely buyer is 3i Group, a U.K.-based buyout firm.

But a recent report from New York Times says 3i is not courting the fast food chain. Instead, a firm called 3G Capital is negotiating for a stake in the company, the Times reports. 3G isn't new to the burger business business. It previously held a stake in Wendy's a couple of years ago, the Times says.

If a sale materializes, it would not be the first time that a private equity firm has stepped in to gain control of the fast food chain. Burger King has been public for four years, but eight years ago it was bought by other private equity interests, including Bain Capital and Goldman Sachs Partners.

Over the years, Burger King's growth has been challenged by rival McDonald's (MCD), which has 36,000 stores -- about three times the count of Burger King locations.

The question now is whether Burger King is a steal compared to its current market value. The stock trades just above $15, well down from its 52-week high of $22.19. McDonald's trades at just over $73, very near its 52-week peak. McDonald's market cap is $78 billion, compared to Burger King's $2.2 billion. Over the past two years, McDonald's shares are up 20%, while Burger King's have dropped 35%. And Burger King's net income from operations in its last fiscal quarter, which ended in June, was only $187 million, hardly enough to support a premium value.

McDonald's has bested Burger King with both its size and menu expansion, which includes a strong line-up of breakfast foods, premium coffee, and smoothies. Burger King is also up against Yum Brands (YUM), which owns KFC, Pizza Hut, and Taco Bell.

Burger King is in a tough spot, which makes it seem that even a private equity group would not pay a huge premium for the company.

This story was updated at 12:10 p.m. Wednesday to include information regarding 3G Capital.

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jigokurei

Sadly, when fast food franchises go public, it often end up chasing the $$$ and in direct proportion loses quality and value over time. Sadly, I feel that McDs, Burger King, Wendy's, A&W, Sonic, Pizza Hut, and countless others have all gone to the end of virtually no return. Like Warrior said, regarding Burger Kind's decision to change their franchise location decorations and style, "They have forced their cheezy "industrial" remodeling style for their restaurants down the throats of their franchise owners." I've said nearly the same thing about A&W, and a couple other that, no matter how nice you make the outside or inside look, with flashy new designs and decorations, it still does not make the food taste any better nor go down any easier. Only a few fast food restaurants still attempt use real quality ingredients as well as to focus on their customers ultimate satisfaction, and namely one comes to mind, In-And-Out. They're still privately owned and operated, and as long as they don't go chasing after the $$$ they'll do just fine. Sadly, corporation have gotten greedy by chasing wealth, by expanding into foreign markets, and really nothing to do with offering a quality food product to those other nations. They're just trying to sell a name. Often then end up losing their foothold on the market and ultimately cannot compete well enough to stay a viable competitor in the market and losing share by be bought out by foreign investors. If you are not aware of whom owns your favorite business, I suggest you research a few of them online. That is, see who it is that owns the lion's share of that business. You may be surprised to learn that it's more than likely a foreign investor or foreign group of investors. And sadly, this is how our country is losing it's businesses to overseas investors. If you feel that it is important to drive these companies out of business here in the U.S., then I suggest you stop supporting them by patronizing their businesses. That means, stop buying from them altogether. But if you don't really care, no worries then, just enjoy.

September 03 2010 at 1:27 AM Report abuse rate up rate down Reply
sabcody

About 5 years ago my family and refused to ever eat at another McDonalds. We have ate at Burger King instead. BURGER KING RULES!

September 03 2010 at 12:01 AM Report abuse rate up rate down Reply
bunnyfunny47

Maybe not eat any of that junk food and go to a nice salad bar place to eat. Do your body a big favor.

September 02 2010 at 7:05 PM Report abuse +1 rate up rate down Reply
HBS

sounds like it could be a "WHOPPER" of a deal!!

September 02 2010 at 12:26 PM Report abuse rate up rate down Reply
batmanh

well, learning that BG went public, four years ago, helped explain why the quality of their product has diminished over the past few years. I really liked the flame broiled burger. I thought . .was it me . .are my taste buds changing with age . .now, I found out . .it's not me . .it's corporate greed . . Mickey D has not changed . .I will never . .I repeat . .never . .go th a BK ever again . .

September 02 2010 at 3:46 AM Report abuse +1 rate up rate down Reply
stonesoupsnake

Burger King is so much better than McDonald's it's not funny. McTrash is expensive, usually served lukewarm or cold, disc-like sandwiches sans meat with smashed-in buns. I had a McChicken a few months ago with NO WHITE (LOOKING) MEAT INSIDE IT AT ALL. A flat cooked disc.

September 01 2010 at 11:25 PM Report abuse rate up rate down Reply
1 reply to stonesoupsnake's comment
thankgodikauai

they are both poison Garbage !!

September 02 2010 at 12:15 PM Report abuse rate up rate down Reply
konviser

This is simply capitalism in action. It has always gone where the money is, where the best deal may be found between private parties. Goodness knows American companies have long owned, in whole or in part, many businesses overseas.

September 01 2010 at 8:29 PM Report abuse rate up rate down Reply
1 reply to konviser's comment
konviser

Looking after the national interest is a government's job. It's never been the job of private companies.

September 01 2010 at 8:40 PM Report abuse +2 rate up rate down Reply
Warrior

I eat meals from Burger King for breakfast, lunch, or dinner probably about 10 times a month. Their food is reasonably good for the price; and certainly better than McDonald's. There are plenty of other fast food restaurants nearby, too...including McDonald's which is about last on my list of fast food places; except, if I want really good french fries, or the Deluxe Big Breakfast. If Burger King is sold to a "FOREIGN" company; I still will not go to McDonald's; but, I will refuse to eat at Burger King; and, I will just go to any one of the numerous other fast food places nearby. As far as I am concerned, if a FOREIGN company buys Burger King, I hope a giant sink hole will swallow up each and every one of its restaurants. Burger King Corporation has no one to blame but its own corporate headquarters for any lack of profits. They have forced their cheezy "industrial" remodeling style for their restaurants down the throats of their franchise owners, which pass the extra costs on to the customers...instead of lowering prices during the recession; and, being more competitive against the other fast food restaurants. They definitely should have gotten rid of that dorky Burger "King" geek in the advertisements a long time ago, too. They came up with some good ideas recently, like the ribs...awfully expensive...awfully good...and, they always seemed to be out off them. Burger King is every bit of an American icon American as McDonald's. If certain icons are sold to FOREIGNERS to increase a corporate profit margin, you will see Americans rally to defeat that profit margin, and tell the FOREIGNERS we will eat at every place, except YOURS!

September 01 2010 at 8:25 PM Report abuse +1 rate up rate down Reply
lisenbyacres

I like Burger King but won't eat there if it's bought by a foreign country, Don't drink Budweiser anymore either.

September 01 2010 at 8:16 PM Report abuse +2 rate up rate down Reply
oaurok

I really like Burger King....but the 'king' in their comercials is downright scary

September 01 2010 at 8:03 PM Report abuse rate up rate down Reply