Hi....At the moment as i understand it Mac has only 5% of the market,Steers has 40%....Burger King is going to concentrate on the lower end of the market with first class products ,but lower prices....Grand Parade is already a very successful company and is the major partner in this JV.It has many tie ups which it also intends using at a later stage.
Needs critical mass to get the benefits that come with economies of scale. I'm afraid 5 or 10 restaurants ain't going to shoot the lights out anytime soon. Can the market take another 200? I doubt it. McDonalds has less than that in SA. I'll personally give it a skip.
Had a look at Grand Parade results and I like it. Solid set of financials, regular divi payer. Low PE. I don't expect the Burger King deal to shoot the lights out, but Buger King does make better food than McDonalds and as soon as the market realize that, I suspect you could see quite a few of these outlets around. Good deal for a good company. I like it and will take a small bite at this with a long term (5 years minimum) view on this.
It will take a while but better to get in now when the share price is relatively low and then wait and enjoy the profits. It is a well run company and this venture can take it to new heights. They are sitting on cash and also looking at other oppotunities. This could be the small cap of the year 2013.
Quite a mountain to climb as Steers also do flame grilled burgers and are well established. Also upwards of 70% of the QSR market is chicken so it will take time and capital to also set up the logistics. On the positive side Adam Hansen is experienced in setting up food businesses such as Cape Town fishmarket, Leonardo's, Squires etc.