It’s a Whopper of a sale as Burger King announces it is being purchased by 3G Capital for $4 billion dollars. According to The Economic Times, Burger King executives released a statement saying, “3G Capital announced that it has entered into a definitive agreement with Burger King under which affiliates of 3G Capital will acquire the stock of the company for USD 24 per share or USD 4 billion, including the assumption of the company’s outstanding debt.” The sale is expected to close by the end of the year, but the number two fast food chain says it will entertain other offers for the next 40 days. “It looks like a good price for Burger King shareholders. I don’t anticipate that someone is going to come in higher,” Telsey Advisory Group analyst Tom Forte told the Toronto Sun.
The troubled fast food chain and home of the Whopper is likely headed for big changes. Analysts say Burger King has stuck to a losing strategy, falling further behind McDonald’s each quarter. McDonald’s beefed up it’s value options during the recession while offering some premium items like the Angus burger, smoothies and high-end coffee drinks. According to CNN Money, Burger King tried to do the same in what they’ve coined as the barbell strategy, which means offering low-cost and premium items on the menu. For Burger King that meant adding $1 double cheeseburgers which CNN Money says enraged franchisees and failed big time. The move sparked lawsuits from franchisees who complained about being forced to sell burgers at below cost.
Burger King announced last week that fourth-quarter earnings fell 17 percent and stores experienced a 3.9 percent drop in sales. Customers didn’t want fries with that loss-leader double cheeseburger and they didn’t want the premium items either. Burger King took swings at $3.99 Steakhouse XT and $8.99 rib combos, but nothing worked to entice their main customer: young men with big appetites. So while Burger King is getting a new owner, many stores are also getting new looks. These massive makeovers include rotating chandeliers, big screen menus and walls of brick and corrugated steel at a cost of at least $300,000 per store. According to CNN Money the revamped stores are getting a 12-15 percent boost in sales.
Tags: Burger King, Hamburgers, Food and drink, Fast food, Whopper, troubled fast food chain, Angus Burger
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