Burger King owner in talks about Whopper of a UK investment

Burger King (EUREX: 18860462.EX - news) 's parent company has approached ‎private equity firms about a Whopper of a deal to invest in its UK operations as it seeks to eke out cost-savings in an increasingly competitive market.

Sky News has learnt that Restaurant Brands International (Frankfurt: 0R6.F - news) (RBI) is in talks with possible backers including Bridgepoint, the owner of Pret a Manger, about a transaction.

The talks are preliminary and may not lead to an agreement, according to several insiders.

Sources said that RBI had contacted several private equity groups about a deal that would see it become the master franchisee of the world's second-largest fast-food burger chain's operations in the UK.

Under the US-based company's plans, a private equity investor would inject tens of millions of pounds into a warchest to be used for buying out individual franchisees.

Such an approach would replicate a similar model used by Burger King in South Korea and other international markets since the chain was acquired by 3G Capital (Other OTC: CGHC - news) , a Brazilian investment firm,‎ in 2010.

RBI is already said to have lined up a number of major UK franchisees to participate in a transaction.

The majority of Burger King's 700-plus UK restaurants are franchises, with several dozen owned by the parent company.

The fast-food chain, which recently began trialling a home delivery service in the UK, ‎has been affected by competition from more upmarket competitors such as Gourmet Burger Kitchen and Byron.

Globally, RBI recently reported a like-for-like sales increase at Burger King of 1.7% in the third quarter of its financial year, citing strength in its business in Latin America and the Caribbean, Asia-Pacific and Europe, the Middle East and Africa.

It does not break‎ down sales by individual markets.

RBI collectively has more than 19,000 outlets in nearly 100 countries under the Burger King and Tim Hortons brands.

The company was formed in 2014 by the combination of the two chains under the same corporate umbrella, with 3G also owning major stakes in HJ Heinz and Kraft Foods Group.

3G is widely regarded as one of the world's most sophisticated financial investors in fast-moving consumer goods industries.

That reputation is partly attributable to its approach to zero-based budgeting, which is an increasingly common effort to keep a lid on costs.

Burger King did not respond to a request for comment on Wednesday.