Burger King gobbling up Hell

By John Drinnan

Burger King operators in New Zealand are planning to buy Hell Pizza for up to $15 million and want to aggressively expand the chain once its purchase is final, probably at the end of this week.

Glenn Corbett, general manager of Burger King master franchisee Tasman Pacific Foods, confirmed the company was negotiating to buy the Hell Pizza franchise system.

He declined to give details but fast food industry insiders suggested a deal for the gourmet pizza company would be completed by Friday and Hell would be sold for $13 million to $15 million.

Hell was started in 1996 and is owned by Warren Powell, Callum Davies and Stuart McMullin.

The principals of the company have been setting up Hell outlets in London and Sydney, which are not covered by this week's pending sale.

It is unclear how much cash the founders will pocket from the sale.

Corbett said Tasman Pacific Foods intended to keep Hell as a franchise with owner operators, rather than running its own stores like Burger King.

Burger King had "core efficiencies and synergies" that would be useful for the expansion of Hell.

Corbett said he was not concerned about the problems faced by Restaurant Brands with falling revenue on its Pizza Hut business.

The pizza market was under-developed compared with Australia and he was not fazed by strong competition from expanding fast food competition such as Subway. Burger King had been performing well, he said.

Dominos Pizza Australia and New Zealand chief executive Don Maij said Pizza Hut's poor results this week - second-quarter same store sales were down 16.5 per cent - were because of its positioning between low-cost Dominos and gourmet brands such as Hell.

Meanwhile, Restaurant Brands is preparing a comeback plan for Pizza Hut including targeted marketing and appointed management from its KFC operation which this week revealed its fifth consecutive year of growth.

Other proposals expected to be detailed in the half-year report include an increased focus on costs, improving in-store operations.

Restaurant Brands' results are also being undermined by Pizza Hut operations in Victoria, Australia.

Restaurant Brands has warned that its half-yearly report will show substantial increases in non-trading expenses because of writedowns of its Victorian operations, with 20 of the stores being sold.

McDonald's Restaurants New Zealand chief executive Grainne Troute said that around one-third of its outlets were owned by McDonald's, with the rest under franchise.

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