Houston Foods to Purchase 260 Burger King Locations from Blackstone Group
A fast-food franchise, Houston Foods Inc, plans to purchase around 260 Burger King locations which are owned by Heartland Food Corp of Blackstone Group LP.
Blackstone Group which had purchased Heartland through its GSO Capital Partners LP unit has agreed to offload the restaurants for less than $100 million. Blackstone purchased GSO, a credit manager run by Bennett Goodman in 2008.
Based in Illinois, Heartland Food Corp owns around 330 Burger King locations in eight Midwestern states. In August 2014, the largest Burger King franchisee, Carrols Restaurant Group Inc said it was purchasing 64 of Heartland’s restaurants in Illinois, Indiana and Tennessee for about $18 million. Heartland has reported annual sales of over $420 million.
The Blackstone Group which is a New York-based private-equity firm is using the deal to reduce its exposure to an increasingly slow fast-food industry. In North America, restaurant chains have struggled with slow sales, hurt by a fast-food price war and fierce competition. In Canada and in the U.S., in the second quarter Burger King’s same-store sales rose just 0.4 percent. Total revenue fell 6.1 percent to $261.2 million.
Over 99 percent of Burger King restaurants are owned by franchisees, and it’s not unusual for them to change hands. According to a spokesman for Miami-based Burger King Worldwide Inc, Miguel Piedra, Heartland Food Corp has been evaluating its portfolio.
Piedra added that a full review is part of that process and Burger King supports Heartland’s efforts and will work closely with its leadership moving forward.
Meanwhile, Burger King is working on its own acquisition. Last month, Burger King agreed to acquire Tim Hortons Inc, for around $11.4 billion, creating the third-largest fast-food company.
Houston Foods’ chief executive officer, Shoukat Dhanani said that in the New England area and Texas, Houston Foods owns 196 Burger King stores.