Burger King to file for IPO

MIAMI — MIAMI -- For the first time in Burger King's 52-year history, the public will be able to own a piece of the fast-food institution.

Burger King announced yesterday that it intends to sell shares in an initial public offering that would make the restaurant chain among the 10 largest public companies in Florida.


The offering marks a major milestone in the company's evolution from the days when founders James W. McLamore and David Edgerton sold 18-cent hamburgers and milkshakes. As a public company, Burger King will have better access to capital to help fight the war against its rivals McDonald's and Wendy's. It also provides the beginning of an exit strategy for the private equity firms that purchased Burger King in December 2002 from Diageo for $1.5 billion.

"Our goal has always been to take Burger King public," said a statement from Greg Brenneman, Burger King's chairman and chief executive, who took over the helm in August 2004. "We believe the transparency and stability in ownership offered by being a public company will benefit our employees and franchisees for years to come."


Under Brenneman's leadership, Burger King has been in a turnaround, reporting a record seven consecutive quarters of same-store sales gains. It's been almost a decade since the chain has seen such a run of positive sales growth.

Despite these gains, Burger King is still trying to return to the level of sales and market share it enjoyed in the late 1990s.

"It was a broken system when they bought it, and it takes longer than they've allowed for a system to be fixed," said Malcolm M. Knapp, the head of a New York-based restaurant consulting firm. "An IPO is premature. It's still a work in progress."

Burger King said yesterday that a registration statement for the public offering will be filed with the Securities and Exchange Commission late this month or early next month. The company said it would have no further comment due to limitations by U.S. securities law. Company spokeswoman Edna Johnson did not respond to a phone call.

Texas Pacific spokesman Owen Blicksilver said he could not comment on the underwriter for the deal or what percentage of the company would be sold in the offering. A public offering has been in the cards since Texas Pacific Group purchased Burger King, along with Bain Capital and Goldman Sachs Capital Partners.

Industry analysts estimate that a deal could happen by the summer and a public offering could include between 20 percent and 40 percent of Burger King. In addition to paying off investors, money from the offering could be used by the company to pay off debt, lower interest costs and invest in future restaurant expansion.

"This enables management to operate on a long-term basis and have access to the capital that this kind of business needs," said Alan Vituli, chief executive of Carrols Corp., Burger King's largest franchisee with 330 stores. "It puts Burger King on even footing with respect to its competition."

Burger King's announcement closely followed McDonald's IPO last week of Chipotle Mexican Grill Inc., which raised $173 million. Chipotle's shares doubled in their debut, closing at $44. Wendy's also plans to sell shares in the Tim Hortons Canadian doughnut and coffee chain.