Burger King Takes On McDonald’s With New Pact in France

Burger King Worldwide Inc. (BKW), which said last week that it will open stores in India, formed a joint venture to accelerate its expansion in France, where it returned last year to take on McDonald’s Corp.

“The Burger King brand and the Whopper brand are iconic” in France, Jose Cil, president of Burger King’s Europe, Middle East and Africa region, said in a telephone interview. “The French quick-service restaurant market is quite lucrative” and the chain is planning to go after about 20 percent of all fast-food sales there, he said.

Burger King will open its fourth French store on Dec. 17 in Paris’s Saint-Lazare train station, Cil said. The first restaurant operated by the new joint venture between Burger King, Bertrand Holding Co. and Natixis (KN)’s Naxicap Partners will open in the first half of next year, he said.

Burger King has been signing deals to open more stores overseas in countries including India, South Africa and China amid tougher competition and declining consumer confidence in the U.S. In France, Burger King will face European hamburger eatery Quick, as well as about 1,250 McDonald’s stores. Both chains have tailored their menus to French tastes.

Fast-food sales in France are projected to rise 4 percent to $12.8 billion (9.43 billion euros) this year after declining in 2012, according to data from researcher Euromonitor International.

Burger King rose less than 1 percent to $20.99 today at the close in New York. The Miami-based company has gained 28 percent this year, while the Standard & Poor’s 500 Restaurants Index has advanced 25 percent.

Earlier Exit

This isn’t the first foray into France for the purveyor of Double Whoppers. Burger King exited the market in 1997, closing about 40 outlets, after a lack of investment by parent company Grand Metropolitan Ltd. and its successor Diageo Plc (DGE) resulted in crimped marketing budgets and run-down stores. It returned last year and has opened three locations in a partnership with Italian restaurant operator Autogrill SpA. (AGL)

The new joint venture with French restaurant operator Bertrand and private-equity firm Naxicap Partners said in a statement that it has signed a master franchise agreement including sub-franchise rights for all of France. The joint venture predicts its new Burger King outlets will create more than 1,200 job openings in its first year.

Burger King will focus on selling the Whopper and other flame-grilled sandwiches in France, Cil said. Still, French fare isn’t off the table, he said.

“We don’t plan to open with macaroons in the restaurants, but you never know,” he said. McDonald’s (MCD) sells sponge cakes, chocolate muffins and chicken-curry sandwiches in France.

Burger King said earlier this month that it formed a joint venture with private-equity and real-estate company Everstone Group to expand in India. The burger chain has about 13,200 restaurants worldwide, of which 99 percent are franchised.

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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