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Another hamburger chain headed to Israel? Burger King
Another hamburger chain headed to Israel? Burger King 
 
 

Burger King in talks to return to Israel

Fast food chain, which left country in 2010, acquired by Brazilian investment fund which is attempting to enter new markets in bid to eat away at competitors' market share

Orna Yefet, Calcalist
Published: 07.18.13, 15:18 / Israel Business

The Burger King fast food chain is attempting to return to Israel, three years after leaving the country.

 

Calcalist has learned that the company is in talks with several investors, including Yair Hasson, formerly Burger King's franchisee in Israel and the company chairman. Hasson declined comment.

 

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Burger King's desire to re-enter Israel stems from ownership changes in the international company. In late 2010, the chain was acquired by Brazilian private equity fund 3G Capital for $4 billion. The buyers support an aggressive strategy of entering markets Burger King is currently not active in, in a bid to eat away at the market share of its competitors, led by McDonald's.

 

12 restaurants within a year

The talks to bring the chain back to Israel are being held between the different investors in the country and Burger King's European arm, which is also responsible for the company's activity in the Middle East. The latter is looking for an investor to open dozens of restaurants in Israel.

 

If the negotiations are successful, Burger King is expected to open 12 restaurants on the first year it resumes its activity in Israel, and 15 the following year. The chain's deployment will then be expanded.

 

The Israeli fast food market is believed to generate some NIS 2 billion (about $560 million) a year, about half of it generated by the hamburger industry. McDonald's sales turnover, according to estimates, totals some NIS 590 million ($164 million) a year.

 

Burger King first entered Israel in 1993. At the time, Hasson held 25% of the shares of Burger King Israel together with Meshulam Riklis and Kamor Motors. In 1998, Hasson and Riklis bought Kamor's share in the chain according to a company valuation of $14.8 million, and in 2001 Hasson sold his share to Riklis.

 

Till 1998, the chain was run by Kobi Hayoun who served as CEO. Hasson served as the chain's chairman in Israel.

 

Upon Hasson's departure, things took a turn in the company's management, which included frequent changes in CEOs within several years. Each of the CEOs brought in tried to change the chain's strategy, which eventually led to its collapse after Burger King slowed down the deployment of its branches and its competitors took advantage of the situation and began gaining momentum.

 

Repurchase attempt

In 2003, Burger King filed for suspension of proceedings in Israel after accumulating NIS 98 million (about $27 million) in debts. Brothers Eli and Yuval Orgad bought the chain for NIS 30 million ($8.3 million). At the time of the purchase, the company had 56 restaurants in Israel and was considered inferior to its competitors.

 

In 2008, Hasson, who at the time served as the chairman of Global Brands (the company which owned the franchise to market Domino's Pizza in Switzerland, Luxemburg and Lichtenstein) tried to buy Burger King. The talks failed, and the Burger Ranch chain was eventually sold to the Orgad brothers as well.

 

The Burger King brand disappeared from Israel in 2010, as the Orgad brothers found it difficult to hold both Burger King and Burger Ranch and decided to merge the American chain with the Israeli chain.

 

When the brothers bought Burger Ranch, estimates on the market were that they would not be able to support both brands and the same time. Some predicted that they would choose to erase the Israeli brand rather than the American one.

 

The Orgad brothers eventually chose to leave the Israeli brand at the expense of Burger King, whose journey in Israel came to an end after 17 years of activity.

 

 

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