HK fund plans to sell Burger King business in Korea and Japan

Hong Kong-based Affinity Equity Partners is planning to sell its Burger King business in Japan and South Korea with a combined sales price reaching up to US$874 million, according to a report from Nikkei Asia.

The report said potential buyers include major investment funds, restaurant chains and companies with experience in franchise management. However, the report quoted an investment fund executive, who said Affinity Equity Partners can hardly find a buyer if it does not sell the Japanese and Korean business separately. It is mainly because when a South Korean company acquires the business, there will be an issue of whether it can manage the Japanese component with the reverse equally true.

Currently, Burger King has around 150 and 440 outlets in Japan and South Korea respectively. Affinity Equity Partners acquired Burger King's Japanese operation in 2017 after purchasing the Korean business in 2016. Since the acquisitions, it has opened new stores and introduced digital marketing methods, increasing the number of stores by more than 100 in South Korea and about 50 in Japan.

The report said sales at the Korean business were estimated to reach US$570 million in the 2021 fiscal year, with earnings before interest, taxes, depreciation and amortisation (EBITDA) estimated at about US$67.38 million. Meanwhile, sales in Japan were expected to have reached about US$130.69 million in the 2021 fiscal year, with EBITDA amounting to "several hundred million yen."

Burger King entered Japan in the 1990s but quit in 2001 due to poor performance. The brand re-entered the Japanese market with the support of Lotte Korea but still saw sluggish sales. Conversely, Nikkei Asia said in South Korea, the number of Burger Kings is as many as McDonald's. The brand also enjoys strong brand recognition too.

Last year, Burger King rolled out a campaign to engage customers in Europe. Burger King Belgium offered viewers of the 2020 Tokyo Olympic Games free Whopper burgers when they took a photo or screenshot of an athlete biting into their medal and post it on social media with the hashtag #WishItWasAWhopper.

The Whopper Medals campaign ran on social media from 27 July to the end of the Olympics on 8 August. At the same time, it also created a 35-second spot featuring a series of photos of athletes biting into their medals. The video ended with the quote: "This time during the games, you won't envy the athletes. They will envy you." The campaign was done in collaboration with French ad agency Buzzman.

(Photo courtesy:123RF)

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