Burger King franchisee details unit upgrade plans

Operators looking to pick up large numbers of restaurants from franchisors or franchisees may want to consider the pre- and post-acquisition strategies of companies such as Heartland Food Corp., which recently acquired 121 Burger King units.

In May 2011, Heartland Food Corp., of Downers Grove, Ill., purchased through a bankruptcy auction 40 Minneapolis market Burger King restaurants previously operated by Duke & King Acquisition. And this past summer, it purchased from franchisor Burger Worldwide Inc. 51 Burger King restaurants in and around Omaha, Neb., and 27 in the Nashville, Tenn., market, and likewise picked up 43 units from a Chicago-area BK franchisee CH James Restaurant Holdings. In all, the company, which had 2011 net sales of $278 million, now operates 415 Burger King restaurants in eight U.S. states and Canada, and is the chain’s second largest franchisee.

Christopher J. Ondrula, chief executive of Burger King franchisee Heartland Food Corp., of Downers Grove, Ill., recently shared with Nation’s Restaurant News how his company handles what it calls the “Heartlandization” of acquisition targets.

Heartland’s Ondrula answered NRN’s questions about his company’s acquisition practices and its detailed “spruce-up plan” that he said “demonstrates to our customer base that the restaurants are under new ownership” and “often results in vastly improved [employee] morale.”

What are some key aspects of your pre-purchase due diligence and post-acquisition assessment processes?

I make it a point to visit each Burger King location personally in order to assess current operations, site location quality and the overall operational opportunity that exists in the market. We then schedule a separate visit for our facilities department to determine repair and maintenance requirements. We also review store-level P&Ls in detail and layer over the company P&Ls with the Heartland P&L to determine the financial opportunities that exist. Finally, we interview above-restaurant-leaders and key management personnel to determine the strength of the current team.

Our initial visits are discrete, so post-acquisition is really our first opportunity to determine, in detail, operational strengths and weaknesses and repair and maintenance needs.