Moreover, market sources say businessmen Eli Davidai and Marius Nasta are trying to sell the master franchise for Romania.
The fast food chain introduced on the local market by the two entrepreneurs about four years ago was ruled insolvent on June 8 as petitioned by Liberty Center shopping complex.
“Atlantic Restaurant System, the operator of Burger King in Romania, went insolvent. An administrator was appointed to take over the company under the law,” Burger King officials said without elaborating further.
The shopping center went to court and filed a petition requesting the insolvency of the fast-food chain in February and shortly thereafter Burger King closed its restaurant in the Liberty Center. At about the same time, it closed the restaurant in the shopping gallery of the Cora Pantelimon center (eastern Bucharest), after having closed up shop in City Mall at the end of 2011.
The company officials said back then it was crucial to focus on the locations that were potential profit makers over the next twelve months. They also talked about possibly opening more restaurants without specifying the number or the location thereof.
Over the past week, however, Burger King continued to close restaurants in Plaza Romania, Bucuresti Mall and Baneasa Shopping City (its first eatery in Romania), which leaves only the restaurants in Piata Romania (central Bucharest) and Cora Lujerului (west of the city). The two will be closed this week.
Sources on the restaurant, coffee shop and bar market say the two Burger King master franchise holders for Romania are trying to find a buyer for it. The company did not comment on the information.
Eli Davidai, the businessman who brought the Pepsi brand in Romania in the early nineties bet on the potential of the local fast-food market in 2008, the last year of economic boom, throwing Burger King into the battle with McDonald’s and KFC. He exited the Pepsi business in exchange for EUR150 million in a sale to Pepsi Americas in 2005. Davidai, one of the lowest-profile businessmen on the market teamed with Marius Nasta, 44, for the Burger King project.
After completing a degree in International Law, Marius Nasta studied law in London from 1990 through 1997 and became an international lawyer specializing in mergers and acquisitions in the City of London. He ran a number of transport and service companies in Europe, Middle East and Africa for ten years, building a career that reached its peak when he went into the consumer goods business.
The two chose to compete with McDonald’s and KFC in the last year of economic boom, 2008, when consumer spending was still growing at a two-digit rate. Things took a turn for the worse afterwards and the consumer-spending decline reached almost 20% in 2009-2011.
The decision of Burger King to close up shop in Romania comes as a surprise on this market where McDonald’s and KFC continued to expand regardless of the state of the economy and have barely closed any restaurant of the cumulated over 100 on this market. On the other hand, the two have a history of over 15 years on this market, as McDonald’s arrived here in 1995 and KFC followed two years later.
The closing of Burger King’s restaurants comes shortly after a new rival arrived on the market. Subway, world’s largest chain by the number of restaurants, opened its first in Bucharest on April 10 in Piata Victoriei (city center) and then expanded outside the capital. The chain has announced ambitious expansion plans (40 restaurants in four years).
(English version by Loredana Fratila-Cristescu)