KARACHI: American fast-food chain Heff’s Burgers is entering the Pakistan market, with local franchise partner Crescent Star Foods planning to set up 10 stores in the next six years in the country.
A securities filing by Crescent Star Insurance on Wednesday said its foods subsidiary has signed a memorandum of understanding with Texas-based Heff’s Burger Franchising for the proposed agreement for the Pakistan territory to open five stores in three years and an option for another five stores in the subsequent three years.
“The terms and conditions will be governed under a letter of intent to be signed in August,” the company said.
Crescent Star Foods is already setting up as many as 30 Golden Chick restaurants under a master franchise rights agreement with another Texas-based fast-food chain, Golden Franchising Corporation, across Pakistan.
In addition, Crescent Star Foods has also signed a similar agreement with Golden Franchising Corporation to open 42 stores in the United Arab Emirates, Kuwait, Qatar, Oman, Bahrain and Saudi Arabia.
Crescent Star Foods is 100% owned by Crescent Star Insurance, a relatively small insurance company in terms of its gross premiums (Rs266 million).
In its detailed financial accounts, Crescent Star Insurance said the local business of its foods subsidiary will become commercially viable during the current year while it is expected to start paying returns from 2017.
With an expanding middle class, the country’s fast-food market has grown in recent years. Many new entrants, like Burger King, Hardee’s, Johnny Rockets and Fat Burger, have grabbed a share from KFC and McDonald’s, two multinational players that have long dominated the fast-food segment in Pakistan.
According to Al Shaheer Corporation, a prominent meat exporter and retailer, Pakistanis consume about 834,000 tons of poultry meat every year, which makes the nation one of the top 20 consumers of chicken globally.
In the annual general meeting of Crescent Star Insurance last April, the company resolved to authorise investments in the share capital of Crescent Star Foods up to Rs50 million, which enhanced its total investment in the subsidiary up to Rs120 million in aggregate.
The period of investment is long term, it said, with the objective of entering the “lucrative food business category.”
Crescent Star Insurance has been on an expansion spree of late. It has invested up to Rs50 million in Pak Kuwait Takaful Company besides investing up to Rs450 million in Dost Steels by underwriting the steel manufacturer’s shares.
It is also acquiring PICIC Insurance at the swap ratio of one to four i.e. any person or institution holding four shares in PICIC Insurance will end up owning one share in Crescent Star Insurance post-acquisition.
Courtesy : Express Tribune