Investors have gorged on restaurant deals this year, but do they have room leftover for Burger King?
Burger King is set to raise as much as $425 million in an initial public offering early next week, and while analysts expect the offering to generate a lot of interest from big institutional investors, they say public retail investors may have a harder time making money on the deal.”Burger King is trying to be more innovative in terms of format, but there’s isn’t much of a growth story there. I just don’t see it having a lot of legs going forward,” independent IPO analyst Tom Taulli said.
Still, the company has one of the best brands in the industry, and since private equity investors from Texas Pacific Group, Bain Capital Partners and Goldman Sachs Funds bought the No. 2 fast-food hamburger chain more than three years ago, they’ve returned it to profitability and improved sales.
Revenue rose to $1.5 billion in the nine months ended March 31, up 5 percent from the same period a year ago. Net income rose to $37 million in the same nine-month period, up about 18 percent from the year-ago period.
“Burger King has fantastic brand equity, and it’s already a competitive concept in America due to its long history, its size and its muscle,” restaurant industry consultant Allan Hickok said.
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