Bill Ackman's Presentation on Burger King ~ market folly

Friday, April 13, 2012

Bill Ackman's Presentation on Burger King

As we detailed previously, Bill Ackman has acquired a stake in Burger King via Justice Holdings Ltd (LON:JUSH). Ackman recently released a presentation on Burger King called "Justice is Best Served Flame Broiled" referencing BK's trademark flame broiled technique.

Key Takeaways From Ackman's Presentation:

- Burger King is the second largest quick-service hamburger chain in the world (80 countries). 92% of its restaurants are franchised and the company has key brand equity (Whopper, "have it your way" and "flame broiled").

- TEV $8.1 billion, Net Debt $2.6bn, Equity Value $5.5bn.

- Given Ackman's real estate background and propensity to focus on investments with assets in that arena, it should come as no surprise that he makes sure to point out that the company owns nearly $1bn of real estate assets.

- Refranchising: Company is expected to strategically re-franchise its company-owned stores.

- Turnaround Initiative: Management seeks to improve average revenue per unit (ARPU) in North America by introducing a new menu, new ad campaigns, re-image stores, and operational initiatives.

- International Growth Strategy: They see boosting global stores to 17,000 by 2016. Obviously with the success of McDonald's (MCD) and Yum Brands (YUM) abroad, BK wants to pursue this and has started an intriguing joint venture in Brazil which it hopes to replicate in other emerging areas.

Embedded below is Justice Holdings' presentation on Burger King:

Be sure to also check out Ackman on the fast food industry, booksellers, retail & the economy.

And for more presentations, head to Pershing Square's presentation on Canadian Pacific.

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