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Burger King Franchise

Burger King is a giant in the fast food industry, selling hamburgers, chicken, fries, onion rings, soft drinks, and desserts. Beyond the standard fare, Burger King also offers breakfast items, salads, combo meals, and kids’ meals, which can be purchased and enjoyed in-store or via a drive-through. Still, much of its business derives from the success of its famous burger, The Whopper. Burger King is committed to serving tasty, affordable food quickly to its customers and outlines a corporate responsibility plan on its website. More about the cost of owning a Burger King franchise below.

Facts & Figures

Burger King is a privately held restaurant franchise. Burger King is found over 75 countries with well over 12,000 locations worldwide. In addition to the fast food restaurant being named one of the “100 Best Global Brands” Fortune magazine lists Burger King in the top 1,000 largest corporations in the United States.

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Burger King Franchise Opportunities - History

Keith J. Kramer and Mattew Burns opened “Insta-Burger King” in San Bernardino, California in 1953, relying heavily on Insta-Broiler ovens to cook the burgers. After the company expanded, Pillsbury bought the company in 1967, shortening its name to Burger King. Pillsbury added to the menu, increased marketing campaigns, and opened franchising opportunities to grow Burger King to the fast food powerhouse it is today.

Burger King Franchise Cost 

The Burger King franchise fee is $50,000, and requires a total investment of anywhere between $316,100 and $2,660,600. Burger King franchise agreements include an additional royalty fee of 4.5%. Franchise incomes vary by location.

Burger King Franchise Business Opportunities: Other Information

Burger King franchise owners are required to have a net worth of $1,500,000, with $500,000 available in liquid assets. Franchise contracts last for 20 years, and are renewable after that period. Burger King offers meetings, evaluations, a grand opening event, and a toll-free phone number to call for problems to to Burger King franchise owners. Burger King consistently runs nation-wide, award-winning advertising campaigns (with slogans including “Have it your way” and “It just tastes better) to maintain brand recognition.

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Burger King is listed in the Franchise Directory under the Food category. It's also listed in the section for Franchises Under $1,000,000 .

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Franchise Business Plan – Burger King

Burger King is the world’s fifth-largest fast-food chain, with over 15,000 restaurants worldwide . As 11 million people visit Burger King worldwide every day, the company cares intensely about customer experience and public respect for the brand. According to IBIS World, Burger King primarily franchises restaurants, with about 90.0% of its stores operating under franchise agreements. About 44.0% of the company’s restaurants are based in the U.S. Burger King’s U.S. industry-specific sales will reach $9.2 billion in 2018. Joorney Franchise Business Plans has extensive experience in collaborating with investors looking to open a Burger King restaurant.

To provide the highest quality Franchise Business Plans , Joorney Business Plan Writers address the key issues, such as:

Advertising

Burger King requires franchisees to pay an advertising monthly contribution equal to 4 percent of gross sales. Burger King uses the advertising contributions to pay for various types of expenses related to advertising and promotion such as market research, development, and production of advertisements, sales promotions, public relations, media costs, and administrative expenses. Joorney Business Plans helps in writing advertising and marketing strategies and developing budgets in line with the franchise agreement.

One of the key points of Burger King’s success is a thorough and intensive training program that covers a broad range of technical and managerial skills. Franchisees must attend two weeks of franchise orientation and complete a 440-hour, on-site training in an existing Burger King restaurant. The franchisor also makes available and sometimes requires periodic workshops and seminars for managers, which include management courses and updating of operational skills. For certain training courses, franchisees must pay a course or materials fee to the franchisor or third parties. Joorney Business Plan Writers have experience describing and developing employee long-term plans and linking the proposed individuals’ skills and training to their designated roles.

Territory Granted

Franchisees are granted the right to operate a Burger King restaurant at a specific location only. However, the franchise agreement does not grant or imply any type of area or territory, exclusive or protected, or protected customer base. Joorney Business Plan writers develop in-depth local market analyses as well as competition analyses helping franchisees estimate their growth potential in a specific territory.

Initial Investment

The franchise fee is a flat $50,000, and the total initial investment could be as low as $300,000 making Burger King one of the more affordable franchising options in its class. Burger King earns 4.5 percent royalties on sales as opposed to the more traditional 6% fast food industry royalty fee. Burger King also offers special incentive programs by being a MinorityFran participant. Joorney Business Plan writers have experience in creating long-term financial projections for Burger King restaurants and understand the specifics pertaining to the initial investment requirements.

By running a Burger King restaurant, you can profit from the expertise that a successful multi-national fast-food corporation provides. Burger King experts have more than 60 years of experience and achievements in the fast-food industry and customer satisfaction.

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Latest Industry News & Insights

Here’s How Much It Costs To Open A Burger King Franchise In South Africa

Here’s How Much It Costs To Open A Burger King Franchise In South Africa. Being the second-largest hamburger chain in the US, Burger King franchise boasts 14,000 stores in 100 countries. It specialises in burgers, salads, chicken, veggies, and desserts. Burger King restaurant franchise continues to provide opportunities around the globe as it is trying to enter new markets and expand in the countries where it has gained popularity.

In order to open a Burger King franchise, one must have a net worth of more than R4 627 395, 50. Burger King’s total initial investment it requires for its franchises is around R4 602 591, 81. This initial amount includes the R711 866, 00 franchise fee. This money will also need to be used for expenses such as building and real estate costs, the cost of equipment and signs, the costs of licenses and permits, the cost of uniforms and the cost of insurance. The company also has a royalty fee of 4.5% of monthly gross sales and an advertising fund that is 4.0% of the franchise’s monthly gross sales.

People who are interested in buying a Burger King franchise should thoroughly evaluate their prior business experience before applying to become a Burger King franchise owner. This is because this venture requires a person who has experience in running a business especially in the restaurant industry. Buying a Burger King franchise has a lot of advantages such as having a good franchise cost and profit balance, receiving a guide from the franchisor on how to open a Burger King franchise with detailed investment information and having a range of franchise formats for sale with reasonable franchise fees and requirements.

The company has proven to have the recipe for success and it is determined to empower franchisees  with first-class knowledge, resources and support needed to be a member of the Burger King family. The Burger King new franchisee approval process includes the completion of the franchise application to understand the franchisee’s professional background and personal finances, verification of net worth and liquid assets through a CPA opinion letter and the submission of a business plan outlining proposed organisation structure, operations plan, marketing plan, growth and acquisition plan.

By Thomas Chiothamisi

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How Much Does It Cost to Launch a Profitable Burger King Franchise?

By alex ryzhkov, resources on burger king franchisee.

• Financial Model
• Business Plan
• Value Proposition
• One-Page Business Plan
• SWOT Analysis
• Business Model
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• Bundle Business Plan & Fin Model

Introduction

The competitive fast food industry has seen consistent growth in recent years, and Burger King is one of the many names leading the pack. With quick-service restaurants (QSRs) making up over 11% of the total US restaurant industry, there has never been a better time to consider investing in a Burger King franchise. Opening a Burger King restaurant requires a significant upfront capital commitment and ongoing operational expenses. In this blog post, we cover exactly how much it costs to open a Burger King franchise and explain which expenses to note.

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Startup Costs

The startup costs for opening a Burger King franchise will vary depending on a wide range of factors, such as location, size, and other expenses associated with the restaurant. Generally, a Burger King franchise can cost anywhere from $300,000 to $2,000,000 to get started.

When calculating these costs, it is important to factor in any additional expenses, such as opening an additional restaurant site. Some of these associated costs may include leasehold improvements, professional fees, taxes, use of a cook-chill system, and the training of staff.

Real Estate Costs

One of the major factors in determining the total cost of starting a Burger King franchise is the cost of acquiring or leasing real estate. According to Statista, the median price of a commercial real estate property in the United States was $177 per square foot in 2019, with the range ranging from $95 to $237 per square foot.

The size of the Burger King franchise will vary depending on whether you go for a free-standing or inside a mall or retail strip center or into another type of building. Generally, for a free-standing Burger King, it is recommended to acquire a minimum of one acre of land, which translates to approximately 43,560 square feet.

Therefore, the median cost of acquiring a piece of land for a Burger King franchise would range from $4.2 million to $5.5 million. In addition to this, you may need to invest more in building structures and outdoor site preparation, which can cost anywhere between $50 to $300 per square foot.

As such, after combining the real estate costs with the construction expenses, the total investment in the real estate component alone can range anywhere between the $4.2 million - $10 million ballpark.

Building Construction Costs

Opening a Burger King franchise is a big financial commitment, and it starts with the building construction costs. To build a typical Burger King franchise with a dining area and kitchen, you should expect to have to pay a minimum of $350,000 - $450,000 in upfront costs. Of course, these construction costs will vary depending on the size of the building, the location, and the type of construction required.

In addition to these building costs, you’ll need to take into consideration licensing fees, property rental fees, functional and kitchen equipment, turf/landscape, architectural plans and permits, local signage, employee expenses, and more. All in all, you can expect to need approximately $1 million in liquid capital to cover the full cost of opening a Burger King franchise.

The cost of some of these items may vary depending on the size of the franchise unit, the type of facility you choose, the location, and even the prevailing market rate. For example, some types of kitchen equipment may cost less than others. Similarly, the cost of architecture, engineering, and architectural renderings will depend heavily on the specific building you’re constructing.

It’s also important to note that Burger King requires all franchisees to own or lease the premises where the restaurant is located. This means that in addition to the costs associated with construction, you’ll need to include the cost of purchasing the real estate or leasing property. Burger King also recommends having a certain amount of additional funds available to cover any unexpected costs that may arise during the construction process.

Franchise Fee

The cost of opening a Burger King franchise can vary significantly depending on the size of the location and the market. However, the initial franchise fee for a Burger King franchise is $50,000. This fee covers the cost of training, branding, and other resources necessary to get the franchise up and running. Additionally, a Burger King franchise must pay an ongoing royalty fee of 5% of its gross sales.

In addition to the franchise fee and the royalty fee, Burger King franchisees must also pay a deposit of $30,000 to Burger King. This deposit is used to cover the cost of supplies and equipment that the franchise must purchase. Finally, Burger King franchisees must also pay a marketing fee of 4% of gross sales. This fee is used to cover the cost of advertising and marketing initiatives.

It should also be noted that Burger King franchisees are expected to have a net worth of at least $1.5 million and liquid assets of at least $500,000. In addition, they must also be able to prove that they have the necessary experience and skills to successfully operate a Burger King franchise.

Permits and Inspections

When it comes to the cost of opening a Burger King franchise, the amount of money you need to set aside for permits and inspections will depend on the area you are in. Generally, you will need to obtain a franchise license, business license, health permits, fire permits, and building permits. The cost of these will vary depending on the city or county in which you are located. In addition, you may need to pay for inspections of the building and equipment.

The cost of permits and inspections can vary greatly depending on your location. According to the International Franchise Association, the average cost of obtaining permits and licenses to open a business in the United States is $3,500. This number can be higher or lower depending on the area, so it's important to research what the cost will be in your specific location. Additionally, the cost of inspections to ensure the building meets health and safety standards can range from $500-$2,000.

In summary, the cost of permits and inspections for a Burger King franchise can range from $4,000 to $5,000, depending on the area. This is an important expense to consider when budgeting for the cost of opening a Burger King franchise.

When opening a Burger King franchise, the cost of Equipment will be one of the primary expenses. This includes the cost of large cooking equipment, necessary furniture, and any other equipment that is necessary to operate the restaurant. In addition, you will need to pay for the cost of installation and setup of this equipment.

According to the 2019 Franchise Disclosure Document for Burger King, the estimated Equipment cost for an average restaurant ranges from $220,000 to $400,000 (USD) . This cost includes all the necessary equipment for the restaurant, such as ovens, fryers, grills, and other cooking equipment, as well as refrigerators, freezers, and food storage units. It also covers all necessary furniture, such as tables and chairs, and all other necessary equipment, such as cash registers and point-of-sale systems.

In addition to the Equipment costs, there may be additional costs associated with the installation and setup of the Equipment. These costs may include labor costs, and the cost of materials and supplies. It is important to factor in these additional costs when determining the total cost of opening a Burger King franchise.

Pre-Opening Advertising

Opening a Burger King franchise is an exciting venture, but it's important to consider the costs associated with launching a franchise. Advertising is an important part of any business, and pre-opening advertising is no exception. According to data from Burger King, pre-opening advertising costs for a new franchise can range from $15,500 to $30,500, depending on the size of the franchise and the market.

These costs cover the cost of newspaper, radio, television, and other forms of advertising. It's important to note that these costs are in addition to the costs of opening the franchise, such as the franchise fee, rent, equipment, and supplies.

When it comes to pre-opening advertising, it's important to remember that the more people who know about your new franchise, the more likely they are to visit it. This is why it's important to invest in targeted advertising campaigns that will reach potential customers in your area. For example, you may want to invest in targeted radio or television ads that are broadcast in your local area. Additionally, you may want to invest in print, billboard, or online advertising to reach potential customers.

It's also important to remember that pre-opening advertising costs are just the beginning. Once your franchise is open, you'll need to continue to advertise in order to keep customers coming back. This includes investing in ongoing radio, television, and print advertising, as well as investing in digital marketing tactics such as social media, email marketing, and search engine optimization.

Overall, pre-opening advertising costs can vary significantly depending on the size of your franchise and the market, but it's important to consider these costs in order to ensure that your new Burger King franchise is a success.

Operations Manuals

When it comes to launching a Burger King franchise, the first step is to understand the brand’s operations manuals. Burger King mandates that all franchisees must adhere to the specific operational policies and procedures outlined in their operations manuals. The operations manuals provide detailed information on how to run your Burger King franchise, from the menu to the store layout. It is important to read and understand the operations manuals in order to ensure that your Burger King franchise is running smoothly and within the brand’s guidelines.

The cost of the Burger King operations manuals varies. At the time of writing, the cost of the operations manuals is approximately $1,350 USD . This cost is separate from the franchise fee and other costs associated with launching a Burger King franchise.

The operations manuals consist of several different components. These components include:

• General Operations Manual
• Templates and Forms
• Marketing Manual

The operations manuals provide instructions on how to run the store, from how to cook the food to how to operate the registers. It also includes information on the different marketing and advertising strategies used by Burger King. Additionally, the operations manuals provide information on how to hire and retain employees, as well as how to maintain a safe and clean work environment.

It is important to remember that the operations manuals are an important part of running a Burger King franchise. Understanding and adhering to the guidelines outlined in the operations manuals will help ensure that your franchise is successful. The cost of the operations manuals is a small investment that can help ensure the success of your franchise.

Employee Salaries

When opening a Burger King franchise, there are various costs to factor in. One of these costs is employee salaries. Employee salaries can vary depending on the size of the franchise and the staff requirements, however, the average salary for a Burger King restaurant employee is between $8 and $12 per hour. This makes the average annual salary for a Burger King employee between $16,640 and $24,960.

In addition to the hourly wages, Burger King also offers a wide range of benefits for its employees. These benefits include medical and dental insurance, vacation and sick pay, 401(k) retirement savings plans, discounts on food, and more. The cost of these benefits can add up quickly, so it’s important to consider these costs when budgeting for a Burger King franchise. The average cost of employee benefits is estimated to be around $3,000 per employee per year.

When launching a Burger King franchise, it is important to consider the costs of employee salaries and benefits. This can help you ensure that your franchise is financially viable and that you are able to provide your employees with competitive wages and benefits. It is also important to remember that these costs can vary greatly depending on the size of the franchise and the staff requirements.

Working Capital

Franchising can be a great way to get into business ownership, but it requires a lot of capital. One of the first costs you need to consider when opening a Burger King franchise is the working capital. Working capital is the money you need to cover all the expenses of running your business until it begins to generate a profit. It covers things like salaries and wages, rent, advertising, inventory, and other operational costs.

The amount of working capital you need to start a Burger King franchise depends on the size and type of franchise you are opening. Generally, the cost of working capital for a Burger King franchise is approximately $50,000 to $150,000 USD. This includes costs such as rent, payroll, inventory, supplies, marketing, and other operational costs.

The amount of working capital you need to maintain your franchise also depends on the size and type of franchise you are operating. Generally, the cost of working capital for a Burger King franchise is approximately $30,000 to $100,000 USD per year. This includes costs such as rent, payroll, inventory, supplies, marketing, and other operational costs.

It is important to remember that these figures are estimates and may vary depending on the size and type of franchise. Additionally, the cost of working capital may increase or decrease over time due to changes in the economy or other external factors. It is always best to speak with a professional financial advisor to get an accurate estimate of the working capital you will need for your Burger King franchise.

The cost of opening a Burger King franchise is substantial, but it can be an incredibly rewarding investment. While the upfront cost of a Burger King franchise is between $1.2 million and $2.5 million , there are a number of ongoing expenses that must be taken into account. These include:

• Real estate costs
• Building construction costs
• Franchise fee
• Permits and inspections
• Pre-opening advertising
• Operations manuals
• Employee salaries
• Working capital

For those who are willing to invest both time and money into a Burger King restaurant, the returns can be substantial. With the right business plan and proper management, a Burger King franchise can be a profitable venture.

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Your Opportunity for Financial Success

Franchise investment.

When you’re considering investing in a franchise, it’s important to be confident that you’re spending your money wisely and making the best possible choices for your financial goals. To put it simply, a good franchise investment is one that’s profitable. Read on to learn more about the franchise fees and costs you can expect.

How Much Does a Burger King® Franchise Cost?

Let’s start with some important numbers. All of our potential franchise owners are required to have a total net worth of at least $1 million and at least $500,000 in liquid assets. If the owner is going to be an entity, each individual applicant is then responsible for an additional fee.

Ongoing Fees

Your initial franchise fee is $50,000, due in a lump sum when you sign your franchise agreement. While the total amount depends on the format you choose for your restaurant, you can expect that to include materials, equipment, certifications, professional fees, and other expenses associated with opening a business.

Operating Costs

Throughout the life of your business, you’ll incur additional restaurant franchise fees that allow Burger King® to give you the support you need to run a thriving business. In general, you can expect to pay these on a monthly or annual basis*.

You’ll also be responsible for a number of fixed expenses, including insurance, investment spending, recurring asset payments, and employee salaries. In some cases, franchisees lease their properties from Burger King®; in that case, you’ll also be responsible for rent.

*Please see item 5 and 6 of the FDD for any additional fees.

Your Return on Investment

You can talk to current franchisees and explore our franchise disclosure document (FDD) during your due diligence. The FDD includes all the financial information you need to determine whether franchising with Burger King® is right for your financial goals, including our business model and our place in the market. Feel free to ask the franchising team any questions you might have about the FDD or your franchise investment at any time during this process – that’s what this time is for.

Submit a Form

To learn more about your financial opportunities as a Burger King® franchise owner, submit an Initial Inquiry Form today. Once our franchising team has reviewed your form and determined you’re a good fit, we will be in touch with all the information you need to make a smart franchise investment.

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Burger King is testing flame-grilled chicken for new sandwiches and wraps

Flame-grilled burgers have been a Burger King signature for 70 years. Now the Miami-based burger giant is bringing flame grilling to its chicken sandwich and wrap platforms with several items in test in Omaha, Nebraska, and Huntsville, Alabama.

Starting Thursday, select BK restaurants in those locations are offering a lineup of Flame-Grilled Chicken Sandwiches and Wraps. Customers have the option of swapping in a flame-grilled boneless chicken breast in Classic, Fiery and Bacon Swiss Royal Crispy chicken sandwiches. And a half flame-grilled chicken breast can be substituted in the chain’s Flame-Grilled Royal Crispy Wraps, available in a variety of flavor profiles: Classic, Fiery, Honey Mustard, Philly, Fiery Bacon and Bacon and Cheddar.

“Huntsville and Omaha offer a unique opportunity for guests in those markets to be the first to try the all-new Flame-Grilled Chicken Sandwiches and Wraps. As with all market tests, Burger King guests in the area will provide feedback that helps determine whether these products will be launched nationally,” said a BK spokesperson in a statement.

This isn’t the first time Burger King has introduced a grilled chicken sandwich. In fact, the BK Broiler launched in 1990 in a push to offer healthier fast-food options. That chicken sandwich went through several iterations since, but this is the first time Burger King is embracing its flame-grilled cred to differentiate the product.

Branding the sandwiches as “flame-grilled” is in sync with BK’s massive campaign to “Reclaim the Flame.” The $400 million dollar revitalization plan, initiated in September, 2022, covers marketing, store remodels and technology upgrades. Last year, in Chapter 2 of the initiative, Burger King introduced a new digital-focused prototype called “The Sizzle.” So far, “Reclaim the Flame” is producing strong results in same-store sales and franchise profitability.

Burger King upgraded its chicken sandwich in 2021, during the height of the so-called “Chicken Sandwich Wars” when dozens of chains launched fried chicken sandwiches after the phenomenal success of Popeyes’ version. At that time, BK transitioned to fresh rather than frozen chicken and hand-breaded the boneless breasts in-house to create the BK Royal Crispy Chicken Sandwich.

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RUSSIA ARCHIVE

Burger king holds a quiet stake in its russian franchisee even as it publicly distances itself, leaked records show.

The fast-food giant is a partner in a Cyprus-registered joint venture with VTB Bank, known as Putin’s “piggy bank,” that shuffled money to and from an anonymous shell company in Seychelles.

Even as Burger King publicly cuts off support to its Russian operation, the fast-food giant has quietly kept a stake in it through an offshore joint venture, leaked documents show.

Burger King’s parent company, Toronto-based Restaurant Brands International Inc., acknowledged the stake after the International Consortium of Investigative Journalists sent questions about its Russian holdings. It then announced it is trying to sell the shares but said it can’t be done quickly.

The company owns its stake through a Cyprus-registered joint venture that includes VTB Bank, a sanctioned, state-owned Russian bank, and a Ukrainian investment firm that Kyiv prosecutors once accused of helping Ukraine’s extravagantly corrupt former leader.

Another shareholder was a Cypriot company belonging to Alexander Kolobov, a Russian restaurant mogul who runs Burger King’s operations in the country.

The documents, leaked to ICIJ as part of the 2021 Pandora Papers project, show that all four shareholders of the joint venture owned their stakes at times through shell companies in tax havens.

The documents also reveal that the Cyprus joint venture previously made a loan to, and received a $1 million payment from, an anonymous shell company registered in the Seychelles, one of the most notoriously secretive jurisdictions in the offshore system.

After ICIJ sent questions about its Russian operations last week, Restaurant Brands International posted a statement on its website saying it wants to sell its stake in the business.

Funny how both @BurgerKing and @TUIUK released public statements soon after @ICIJorg & partners sent them detailed questions about their Russian business partners & offshore dealings in #PandoraPapers Coincidence? #RussiaArchive 🧵 1/3 — Scilla Alecci (@shirafu) March 18, 2022

In an emailed response to ICIJ, the company said, “We have asked the master franchisee to suspend the Russian business with immediate effect. They have refused and due to the franchise structure and current agreements, we do not have the ability to force them to close.”

The leaked records show that the joint venture, Burger King Russia Ltd., partly owns the Russian franchisee, Burger Rus LLC. The Toronto-based parent company said it has no control over it.

The revelations of Burger King’s quiet equity stake compounds the fast-food giant’s complications in the Russian market. While rival McDonald’s and other fast-food multinationals have ceased operations in the country in response to Russia’s invasion of Ukraine, Restaurant Brands International says it can’t do the same due to its “fully franchised” Russian operations. It has instead suspended “corporate support” for the restaurants and redirected profits from its 800 Russian outlets to Ukrainian refugee relief efforts.

Burger King owns its 15% stake in the Cyprus joint venture, Burger King Russia, through a European unit, based in Switzerland.

Another shareholder, Investment Capital Ukraine (ICU) owned its 35% stake in Burger King Russia through another Cyprus-registered firm, according to the records. ICU announced plans to sell its stake on March 5.

“Given the current situation, ICU has concluded that we will be exiting Russian investments,” a spokesperson told ICIJ.

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The sanctioned VTB Bank, Russia’s second largest, had owned its stake in the joint venture through a company registered in the tax haven of Guernsey, an island in the English Channel.  The Pandora Papers show VTB, known as Russian President Vladimir Putin’s “piggy bank,” later transferred the stake to a Russian-registered company. Cyprus’ registry data shows the VTB-controlled company holds about 20% of the joint venture.

The leaked documents illustrate the political and financial perils Western multinationals face when investing in the Russian market, where rule of law is weak and corporate transparency hard to come by.  They describe how Burger King’s Russian operations started and thrived, thanks to its partnership with shell companies in shadowy offshore jurisdictions. They also show the complexity of business deals that rely on politically connected partners like VTB, the state-owned bank whose role is to connect Russia to international markets.

Burger King’s partnership with VTB puts the fast-food chain into a “very difficult place” because the U.S. issued “full blocking sanctions” against the bank, said Maria Snegovaya, a Russian political scientist and visiting scholar at George Washington University.

“VTB can provide really great credit conditions for the company so they get a lot of money to invest to grow their business,” Snegovaya said. But it also “makes it more dependent on the Kremlin.”

VTB did not respond to ICIJ’s questions about the joint venture.

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PANDORA PAPERS

Baker mckenzie, a go-to firm for kremlin-linked companies, now says it’s leaving russia, mar 15, 2022.

FINANCIAL SECRECY

How a network of enablers have helped russia’s oligarchs hide their wealth abroad, mar 02, 2022.

ICIJ announces the Russia Archive, an inside look at the hidden wealth of oligarchs and elites close to Putin

Mar 08, 2022, the joint venture.

In 2010, the burger maker, then known as Burger King Corp., opened the chain’s first Russian franchise in Moscow, long after competitors like McDonald’s and KFC had conquered the country’s fast-food market.

Two years later, the company set up Burger King Russia, registered in Cyprus as the “exclusive operator” of the Burger King franchise in Russia, leaked share purchase agreements show.

Announcing the deal at the time, the Russian bank didn’t mention the offshore holdings but said it had invested $50 million to buy a 47.22% stake in the joint venture, and pledged to invest up to $100 million in three years.

Burger King quickly became one of the most recognized foreign brands in Russia, marketing surveys showed. Hundreds of Whopper-selling joints popped up across the country, even in the Siberian city of Novosibirsk.

In 2013, ICU’s Cypriot company bought a 12.2% stake in Burger King Russia from VTB’s Guernsey subsidiary for $25 million, the Pandora Papers show.

At the time, ICU’s clients included companies allegedly linked to the notoriously corrupt regime of then-Ukrainian President Viktor Yanukovich, a Russian proxy.

The Kyiv-based investment firm is also known for advising Ukraine’s former President Petro Poroshenko on the sale of the confectionery business that made him a billionaire.

Among ICU’s shareholders were people linked to influential Russians, including Galina Ulyutina, the wife of Yury Soloviev, a top VTB executive at the time. Both Galina and Soloviev were recently sanctioned by the U.S. for their ties to the Kremlin.

Burger King stayed in the joint venture with VTB after the U.S. imposed initial sanctions restricting some transactions with the bank in response to Russia’s 2014 annexation of Crimea.

The following year, the Cyprus-based joint venture made a $372,000 loan to a “related party” in the Seychelles, a well-known secrecy jurisdiction, according to financial statements in the leaked records. The Seychelles company later transferred $1.16 million to the joint venture, the receivable from a “frame merchant marketing agreement” the shell company had signed with an undisclosed party, the documents show.

The documents don’t provide any details about the transactions and don’t say who owns the Seychelles company. The jurisdiction’s stringent laws make it almost impossible to trace the companies’ true owners.

Restaurant Brands International told ICIJ that it cannot comment on the transactions because it doesn’t have any control over “the day-to-day decisions of the master franchisee,” Burger King Russia.

The ICU spokeswoman also said the firm doesn’t know about the transactions because it has “never been directly involved in [the] company’s operations.”

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From guernsey to russia.

In 2018, VTB sold more of its stake in the joint venture to ICU’s Cypriot affiliate, making it Burger King Russia’s largest shareholder.

The Pandora Papers show that VTB later replaced its Guernsey shell company in the joint venture with a Russian firm the bank indirectly controls, according to Russian corporate registry data. The documents don’t say why.

A few months later, Ukrainian prosecutors accused ICU and one of its managers of being part of a criminal network that helped Yanukovich and his cronies embezzle $74 million. Prosecutors later dropped the charges.

ICU and its managers said the charges were politically motivated and denied wrongdoing.

Restaurant Brands International said that the company “did complete additional due diligence and established there was no basis for Burger King Europe to challenge [ICU’s] continued investment in the business.”

From a pizzeria in Mexico to flooding Europe with fast food: Alsea is growing at a rate of 100 openings a year

The mexican multi-brand restaurant operator is growing exponentially in the old continent with high-profile brands such as domino’s pizza, starbucks, burger king and chili’s bar & grill.

A Domino’s Pizza branch in Galapagar and a Starbucks in Fuenlabrada, both in Spain’s Madrid region, are the two latest openings by Alsea, the Mexican multinational that operates these and other high-profile restaurant brands such as Foster’s Hollywood, Chili’s Bar & Grill, Popeyes, Burger King and California Pizza Kitchen. By the time this article is published, there will surely be more, as the group is growing at a rate of two openings a week in at least one of the six European countries where it operates: France, the Netherlands, Belgium, Luxembourg, Portugal and Spain. José Luis Portela, its European CEO, explains that they managed 100 new restaurants in 2023 (60% owned and 40% franchised), and that in 2024 they will continue “on the same path,” having exceeded a total of 1,500 establishments on the old continent. Its plan, announced in 2023, is to open 400 more establishments by 2025.

The group’s origins lie in a Dominos’s franchise opened by brothers Cosme and Alberto Torrado in Mexico City in 1990 with the help of their mother. It took them only nine years to be listed on the Mexican Stock Exchange. With the family as the main shareholder, they then expanded throughout Latin America and branched out into Europe in 2014, buying the Zena group. In the past 10 years, they have devoured the market share of fast-food operators on that side of the Atlantic.

At the end of 2018, Alsea acquired the Vips group and, in 2019, the exclusive rights to operate Starbucks in France, Belgium, the Netherlands and Luxembourg. Although in 2019 rumors circulated of a possible public offering (IPO) in Europe, the company states that there are no such plans for now. The last announcement dates back to March, when they acquired the remaining minority stakes in the capital of its European subsidiary, including those of the Arango family, founders of Vips, which held 5.13%, for €238 million ($259 million).

Behind this meteoric growth is a steady increase in sales with a record turnover of nearly €1.27 billion ($1.38 billion) in Europe last year with 6% growth in the first quarter of €300 million ($326 million), despite the fact that in many European countries where they operate consumption has become more restrained, as acknowledged by Portela. His quarterly balance sheet reflects the fact that many consumers are turning their backs on U.S. franchises in France and the Netherlands due to Israel’s offensive in Gaza . “There has been an impact since October, especially with the Starbucks brand in Central Europe and France, but we think it is temporary and we are looking ahead with optimism,” he says. “Now, with the Olympic Games coming, we are getting ready and hiring people to meet an increase in demand.”

The company’s accounts are experiencing another positive cyclical effect: both the fall in energy costs — which have not, however, been matched by an equivalent fall in prices — and the normalization of the Consumer Price Index (CPI) in many food products have boosted its operating profits by almost 11% in the first quarter of the year. Globally, Alsea’s European business accounts for 30% of sales and 20% of profit. “Latin America and Europe are different markets,” says Portela. Lower labor and leasing costs in Mexico mean that margins are higher back home.

Four factories

Alsea’s operating strategy is, however, similar across the board. Alsea has four factories in Spain that make everything from the dough for its Domino’s pizzas to Starbucks sandwiches and Foster’s Hollywood ribs. Its main loyalty club in Spain has almost 1.8 million followers and offers discounts and incentives to customers to eat at one of its restaurants. “We have very varied client profiles,” says Portela. “At Starbucks, we get everything from 15-year-olds to older people who tend to use and consume different products. Those of my generation drink lattes or black coffee, while younger people like cold drinks or cappuccino. Vips is a brand that has been around forever, and some people come to snack on its famous pancakes. Domino’s Pizza has everything and attracts a slightly younger clientele.”

Consumers are looking for novelty and variety in how they can order. “At Burger King, we have digital kiosks for ordering,” says Portela. “At Starbucks, you can order through the app and pick up your order directly at the delivery area without going through the cashier. At Foster’s, Vips and Fridays, you will be served by a waiter, but if you are in a hurry and don’t want to wait for the bill, you can pay on the app and leave.”

Alsea has 22,626 employees on the continent with most on minimum wage. Employees in Spain, at least, have benefited from the 2024 minimum wage hike. “Here, and in the world in general, there has been strong growth. Better wages offer more consumption capacity,” adds Portela.

In terms of distribution, 30% of Alsea’s sales are digital. They operate through their own platforms and through aggregators such as Glovo. “Customers ask us to make interaction with other brands easy,” explains Portela. “If I want a delivery, I can do it through the app, the phone, whatever channel offers you the best experience. It’s not just about the burger, the salad or the pasta dish, but the service, the ordering facilities and the cleanliness.” Alsea is confident that they will continue to grow despite widespread concern regarding obesity and sedentary lifestyles — in Mexico, almost four out of every 10 people over 15 years of age suffer from obesity . The country has the second-highest obesity rate of all the countries that make up the Organization for Economic Cooperation and Development (OECD), just six points below the United States (42.8%). “Fortunately, there is plenty of room to grow,” Portela says.

The franchise system

Alsea’s business uses a range of formulas with to operate third-party brands, something they can do exclusively in one country or as franchisees of another company, as is the case with Burger King in Spain, where the main operator is Restaurant Brands Iberia. They also have their own brands such as Vips, some of which are franchised. The brand present in most European markets (six) is Starbucks and the brand with the most stores is Domino’s (384).

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