What is giving Burger King an edge over its peers and what is the company doing to keep up with the changing consumer trends especially in the post pandemic era?
Let me put this in two parts; first on the business part, if you look at the agreement that is in place is a very long one until 2039. It gives us an exclusive right to build restaurants in the entire country. It also gives us the exclusive right to sub-franchise if we choose to.
In that agreement, we have this journey to build 700 restaurants by December of 2026. That is the agreement and it is an exclusive agreement and it is something that is a big asset to this company. On the consumer side, the Burger King brand is positioned with millennials which is the largest population eating out of home. So together, it is a very strong agreement with a very strong target audience and the kind of menu that we have put in it is an extensive research.
It was one of the largest researches I have done in my life and I have spent over a quarter century in the QSR industry. And this research enabled us to build a menu that does two things; one is it positions the brand as a value leader; and secondly, it also provides a great exciting menu on a barbell strategy. That is the menu architecture that we have put in place to grow this brand from where we are today — 268 restaurants to 700 restaurants and then beyond.
In the last two years, your revenue has grown by more than 2x. Do you see this kind of a growth continue over the next couple of years as well?
We did about over Rs 835 crore pre Covid till March 2020. We can see two types of growths. One is the growth of business within the restaurant and then the second one is the growth of the number of restaurants. If you would take the following year and this is obviously a tough year for the entire country, as we normalise and go into the following year, we will continue to build restaurants.
We are going to be a little cautious in the first year and build approximately 50 restaurants but the growth after that is going to be 70 restaurants and then 80 restaurants and so on and so forth. We are going to continue to ramp up and continue growing the restaurants but that is the way we build our business and we continue to grow. We build synergies. These synergies help us in two ways; one is it helps us to bring down costs with the restaurant by bringing in more supply or economies of supply from the same suppliers or bringing in multiple suppliers to provide us economies of scale.
The second is it now gives us a better chance to use our marketing dollars to take our brand to the consumers and bring awareness and build awareness with the consumers.
ET Now: We are witnessing a trend of dine-in rather making a comeback. That is that the case for Burger King as well. How far along are you from the pre Covid levels?
Rajeev Varman: We have a total of 268 restaurants. We have restaurants in malls which is a destination zone. Our restaurants, especially in the north and NCR are in metro stations which are again destination restaurants. People get off the metro and buy and purchase and leave. That is a very strong dine-in business. Coupled to that is our restaurants that are on highways. So a lot of our restaurants are destination restaurants. We will continue to drive a significant amount of business through dine-in as well and we will continue to grow.
We have done a lot of work in the past. We were the first ones to jump and move forward with the aggregators when the aggregators came in the country. We have also now built our own app. It has a lot of things like a loyalty programme, rider journey and it also has the best gaming set up. It has got ways of doing analytics and so forth. It is a great app we have put in place and we are excited about building a substantial portion of delivery business on to this app and we will do that over the next several years.
The company has reported a loss in the last few years. When do you see that meaningfully turn around?
Ours is a cash flow business. We look at margins as EBITDA margins. We have been positive pre-Covid and we will continue with that trend moving forward. We have overheads at the office. These are overheads which support the restaurants. As we continue to build more and more restaurants, you will find that the EBITDA delivered by those restaurants has now already covered the fixed cost or the overheads at the head office. We call it restaurants support centre and beyond that they go directly into the bottom line or to the company level EBITDA. So that is the trend we should be seeing moving forward.
We have done a lot of work in the past. We were the first ones to jump and move forward with the aggregators when the aggregators came in the country. We have also now built our own app. It has a lot of things like a loyalty programme, rider journey and it also has the best gaming set up. It has got ways of doing analytics and so forth. It is a great app we have put in place and we are excited about building a substantial portion of delivery business on to this app and we will do that over the next several years.
