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Business & Finance

Pizza Hut and Burger King under new management in Pakistan

  • Maaks International acquires businesses from MCR and MCR Pakistan, a transaction industry officials put in the range of $10-15 million
Published December 6, 2022
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KARACHI: Islamabad-based Maaks International has acquired MCR and MCR Pakistan, the firms that run food chains Pizza Hut and Burger King, respectively, in the country, in a transaction industry officials put in the range of $10 million to $15 million.

The franchise business of the two food outlets is currently out of commission with the new owner vowing a comeback within this month, and an addition of roughly 25 new outlets each year. The companies will retain their brand identity, but will come under new management.

Maaks International, a privately-held business, has operations in the rice, petroleum, hospitality, pharmaceuticals, and FMCG sectors.

Its acquisition will involve running the operations of 84 Pizza Hut and 9 Burger King outlets in the country. The new management vows to take this number higher over the next five years.

“We want to revamp operations completely,” Azhar Jafri, Executive Director of the newly-acquired MCR and MCR Pakistan, told Business Recorder in an exclusive interview.

“We plan to increase Pizza Hut branches to 200 and Burger King to around 50 by 2027.”

Jafri, who appeared to be more bullish on Pizza Hut than he was on Burger King, said there was no reason why the pizza business could not retain its position as market leader.

What went wrong?

Jafri said the company was unable to maintain Pizza Hut to its international benchmark, citing this as the main reason for its sub-par performance in the country.

“All outlets have been closed at the moment because of supply-chain issues. The previous management was neither focused on supply-chain nor the ambiance of Pizza Hut.

“During this time, it lost market share and allowed others to get ahead.”

Pizza Hut is owned by Yum! Brands, Inc., based in Kentucky, US. Its subsidiaries operate a system of over 53,000 outlets in 155 countries and territories under the company’s concepts – KFC, Taco Bell, Pizza Hut and The Habit Burger Grill.

Burger King is owned by Restaurant Brands International (RBI) Inc., one of the world's largest quick service restaurant companies with more than $35 billion in annual system-wide sales and over 28,000 restaurants in more than 100 countries. Tim Hortons, Popeyes and Firehouse Subs are other companies owned by RBI.

“The previous management stopped following Yum!’s guidelines. It has also happened in the past with KFC in Pakistan. You will struggle if you stray from those guidelines,” added Jafri.

While the official remained upbeat over future prospects, it was learnt that other business houses also looked to acquire the MCR portfolio that had been up for sale for a while.

“Many renowned businesses also bid to buy MCR but international businesses such as Yum! follow certain guidelines.”

Jafri said the transaction process is now almost complete, and currently, banks’ reconciliation is underway.

He added that the businesses would be run directly as opposed to “sub-franchising”.

The competitors

Jafri said that they will look to compete in the top-tier of pizza outlets, signaling that the price-point would remain high.

Despite inflation, Jafri said that there remains a big market for high-end food businesses in Pakistan.

“Go to Kolachi (restaurant) — there are around 1,000 waiters to serve the high number of customers. Go to Lal Qila (buffet restaurant), which is very expensive. Pizza Hut is comparatively inexpensive compared to their food.”

Jafri said Pakistan’s restaurant market has huge potential. International food-chains such as KFC, McDonald's and even Nandos are all making money in the country.

“Pakistan has been left with two income groups left. You either belong to the high-income group or the low-income one. The middle-income group has been squeezed.”

“Recently, our RGM (Regional General Manager) from Sukkur asked us to open a Pizza Hut outlet in Larkana. He said one KFC branch was recording sales of Rs600,000 to Rs700,000 a day.”

He added that the company was pondering opening branches in Nawabshah and Larkana.

“We may have competition here (Karachi) but we won’t have it in those areas. No one else would go there.”

Jafri said that they will make the best use of technology in what he called the transformation phase.

“We have sent the people making software for us to Dubai so that similar software that Yum! uses internationally is used here as well.”

Issue of pending salaries

Meanwhile, a person recently employed at the company on condition of anonymity, since they were yet to settle arrears, told Business Recorder that there is a large number of employees waiting for salaries.

“Some of our dues have not yet been cleared,” they said.

Jafri admitted the new management has started the process “but due to the reconciliation and transition, pending payments have not been released as yet”.

“It’s not only salaries but vendors and landlords (have been waiting for their dues).”

Jafri added that every payment due on the company will be cleared.

“(We will pay) 100% once the audit and reconciliation is complete,” he added.

He said that there are around 1,200 human resource personnel employed by Pizza Hut and they were screening them to see which ones they can retain.

“We have a plan for complete revamp. Screening is part of that plan.”

Comments

Comments are closed.

Rebirth Dec 06, 2022 11:09am
Instead of building our own existing brands that have been successful locally and even among foreign expat markets, they’re finding ways to move corporate profits abroad and depleting our forex reserves further. Syed Babur Ali of Mitchell’s and LUMS said we need our brands bringing forex reserves from abroad instead of relying on remittances. Why not invest in creating franchising opportunities for our own fast food brands or restaurants, even the fashion industry? Investing in growing foreign brands doesn’t even help the investors themselves. They have to pay the franchising fees in foreign currencies. The exchange rate hurts their profits too. Our economy and our future is just as dark as the people travelling in rickshaws and motorcycles because of the pollution the very same vehicles cause. The amount they’re spending to bring these brands could be reinvested in expanding the number of franchises of existing local brands. Growing second-tier cities have a huge appetite (literally).
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Faizan Arif Dec 06, 2022 12:31pm
In my opinion, no way to invest in burger king besides to see the numbers. Need to do Apple to Apple Comparison, Kolachi and Lalqilla is not the fast food restaurant. However, Still 70s and 80s born still not adopt Pizza and Burger as a real food. On the other hand, after COVID-19 people are more looking for good diet.
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Imran Ali W, UK Dec 06, 2022 12:38pm
Pizzas and burgers when inflation is literally crushing poor and middle class folk. No matter what happens, dollar will always be with elite.
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Muhammad Yasir Ansari Dec 06, 2022 02:21pm
it has become a perfect competition market, narrow margins , entrepreneur bubble motivating young people to have road side kart with better burgers , tacos and fast food with less operating cost, will definitely be a challenge for established brands but new market and cities may be a good option
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Muhammad Wajid Dec 06, 2022 06:41pm
پیزا ہٹ کی حالت تو یہ ہوگئی ہے کہ ہمیں United King کا پیزا Pizza Hut سے زیادہ اچھا لگتا ہے ۔
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Basharat akbar Dec 07, 2022 01:53am
Looking forward work with your company as a part of your management thanns
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Farid Khan Dec 07, 2022 12:39pm
Fall of Pizza Hut is because of TEAM. If your want success you need to build or developed a good team.
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N. Sid Dec 08, 2022 09:11am
A welcome news. Pizza Hut had gone to the dogs. In every aspect. Good the management has changed.
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Fahad Dec 08, 2022 02:33pm
Good products sell themselves. Once products are compromised, all other operations fall like dominos (no pun intended). Bring back the quality Pizza Hut was once known for, the reformation will all be cakewalk.
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Sadoor Khan Dec 09, 2022 11:09am
Very Ambitious and to the point suggestions from Mr Jafri I will 100 percent agree with him about the standard drop of Fast food frenzies in Pakistan As an overseas Pakistani our kids always love to go US base fast food places At few years it was very attractive But very soon the standard drop We hope new management will implement as mentioned in professional interview Wish them all the best See you guys soon We always visit our country in summer Love Pakistan and wish all the best to new owners
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Zaheerabbas Dec 12, 2022 12:06pm
Sir Koch to bato salary kab melagi Pizza Hut Wala shatff ko
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