Burger King to enter with DLF

Anandita Singh Mankotia, Rishi Raj

New Delhi, Nov 22 The world's second-largest burger chain, the $2.3-billion Burger King of the US, is set to enter the Indian market. The company is tying up with the country's largest real estate company by value, Delhi-based DLF, in a 51:49 joint venture. Regulations allow up to 51% foreign direct investment in single-brand retail.

The Miami-headquartered Burger King was earlier in talks with Kishore Biyani's Future Group but they fizzled out when it opened negotiations with Seattle-based coffee chain Starbucks. The fast-food chain, which has 11,100 restaurants across the globe, operates over 90% of its outlets as franchises. By entering into a joint venture with a real estate company, India, therefore, marks a departure from its usual strategy.

When contacted, a DLF spokesperson said that the company was talking to many prospective partners, but that nothing has been finalised.

The fast-food chain is expected to begin its South Asia foray with India and then is likely to enter the neighbouring market of Sri Lanka, among others, sources said. The company, which is already present in 65 countries worldwide, had been eying India for some time.

Once Burger King sets foot in the Indian market, it will be directly pitted against arch rival, the $20.4-billion McDonald's, which is the world's largest fast-food chain with 31,000 stores worldwide. McDonald's operates 122 outlets across the country through the franchise model. Other global food chain majors like Pizza Hut, Domino's, Papa John's and KFC are already present in the country.

Negotiations between Burger King and DLF highlight the growing trend of tie-ups between foreign retailers and Indian real estate developers, confirming the critical nature of property costs in the success of such ventures.

Analysts point out that with escalating rental-to-revenue ratios, such an arrangement could soon become commonplace, as in retail, established international retailers need an Indian partner only for access to the Indian market.

In a scenario of spiralling rentals across the country, an Indian partner with land banks and access to prime locations becomes the natural choice.