Burger King changes command: Ariel Grunkraut takes the crown

After changing its name to Zamp, the master franchisor of the Burger King and Popeyes brands (formerly known as BK Brasil) has just announced a transition in command. Iuri Miranda, the executive who helped to structure the chain in the country — going from an unknown business without its own stores to a company with more than R$ 4 billion in sales and 945 restaurants — will pass the crown after 12 years, getting a vacancy on the board of directors.

From 2023, Ariel Grunkraut takes over as CEO, doubling BK’s bet on the company’s digitization. One of the founding partners of BK Brasil, a company that emerged in 2011 as a joint venture between Vinci Partners and the then Burger King Corporation (now part of Restaurant Brands International, controlled by 3G), Grunkraut led the sales and marketing areas from the beginning. and, for two years, he has been in charge of the technology area.

After a pandemic winter that shook the global food service industry — in Brazil, it was no different —, the Burger King operator in Brazil managed to recover with the reopening of the economy and, of course, the malls (the largest source of revenue for the company). When he passes the baton to Grunkraut, Miranda will deliver a company that has the highest gross margin since the group went public in 2017.

In the first quarter, BK Brasil (or Zamp) posted a gross margin of 63.4%, up 4.9 points year-on-year. The adjusted Ebitda margin reached 12.6% – the operating result was negative a year ago -, showing that the company not only recovered from the worst moment of covid-19 but also gained profitability even at a time of rampant inflation.

“What you saw most in the last quarter were companies with growing sales, but a tight margin. At BK, we managed to do the opposite for three quarters. We are at the best gross margin level in history”, said the future CEO of Zamp to Pipeline.

No wonder, BKBR3 — the company has not yet decided whether to change the stock ticker, to incorporate the new corporate brand — is one of the best performing stocks in 2022. In the year, the stock appreciates almost 30%, while the Ibovespa rose 5.5%. The Burger King and Popeyes operator is valued at R$2.1 billion, which is still half of the R$4.2 billion that marked the group’s debut on B3. Atmos, Morgan Stanley, Vinci Partners, APG Asset, Montjuic and Somerset Capital are among the major shareholders.

In Miranda’s view, the improvement of BK Brasil’s operational indicators is going through a revolution in the technological area. In the midst of the pandemic, the team led by Grunkraut digitized the company, capturing a substantial volume of data that made it very easy for the customer to know.

Currently, a third of sales are already identifiable, which can allow customized offers by consumer profile — in times of high inflation, an individualized promotion at the expense of a massive discount contributed to margins. In the first quarter, digital channels were responsible for 32.6% of sales.

In this strategy, the BK app’s loyalty program has already reached 5 million consumers, accounting for 21% of sales in the first quarter. “What’s the dream? Starbucks has 50% of sales going through the loyalty program,” said Grunkraut, noting that the coffee shop chain has had this program for over a decade. “With technology, it’s very fast. Our outlook is positive for the coming years.”

Upon taking over Zamp, Grunkraut will continue the digitization process — now, from the door in. If the relationship with consumers has already been digitized, the group still has many opportunities in the operational area. “The Whopper has been made the same way for 50 years. There is an opportunity to digitize operations, inventory counts and bring technology to the tax, financial and supply areas”, he lists.

With the recovery of the sales flow and the indebtedness indicators falling – the leverage, which was at 2.4 times in March, should be between 1.5 times and 2 times at the end of 2022, allows the company to resume the rhythm of opening of stores, expanding Popeyes’ regional reach to more Brazilian capitals and investing in more Burger King stores in the free standing model (those on the street with parking and drive trhu).

Category diversification, like last year’s attempted takeover of Domino’s, is in the background — for now. As the name Zamp suggests, the company can go well beyond a brand.

Source: Value Pipeline