Focus: Burger King has been hit by the lockdown and its parent company has now been placed into receivership.
There should be appetite for the Burger King business among investors despite the massive uncertainty caused by the Covid-19 pandemic.
This according to First Retail Group managing director Chris Wilkinson, who told the Herald today that quick-serve restaurants are in a better position to bounce back than others.
His commentsfollow today's announcement that the operators of Burger King are putting the business up for sale, citing the "significant impact" of the Covid-19 lockdown on the fast-food business.
"While some the hospitality sector is likely to face significant headwinds, we expect the quick-service restaurant channel (QSR) to be relatively resilient and rebound well, once lockdowns are lifted," Wilkinson said.
He said the move made by Burger King reflects some of the major challenges facing larger businesses.
Fulfilling lease and creditor commitments with a network that has been highly reliant on strong cashflow is impossible when you can't open the doors," he said.
"It doesn't take long to burn any working capital that may have built up - especially with the scale of this operation and as they have said, injecting more funds was not an option they wanted to pursue."
US private equity firm Blackstone paid $107 million for the Burger King operations back in 2011, and according to Australian Financial Review was looking to sell the business in March 2019.
Asked whether he thought it likely that Burger King may shut down in New Zealand, Wilkinson said he doubted it.
"This [the receivership] will provide breathing space and an opportunity to seek new ownership with, potentially, fewer encumbrances if they are able to successfully negotiate with supply and property partners," he said.
"Similar situations have been happening in the UK as large retail groups look to contain risk and reposition through changes to cost structures."
Rival fast-food operator Restaurant Brands New Zealand, which operates KFC, Pizza Hut and Taco Bell, has told the market that the impact of lockdown closures on its New Zealand business will be "significant" but it remains well funded and will ride out any disruption.
Restaurant Brands has received $21.81 million in wage subsidies from the Government, while Burger King has claimed $11.5 million.
Both organisations now face a wait to see whether they will be allowed to operate if the restrictions are lifted to alert level three.
