Saturday, March 5, 2005 - Daily Herald

Hispanic owned Franchise Buys 41 Burger Kings

Downers Grove-based Heartland Foods Corp. becomes the largest Hispanic-owned franchise in the chain.

With the announced purchase of 41 Burger Kings on Friday, Downers Grove-based Heartland Foods Corp. becomes the largest Hispanic-owned franchise in the chain.

It's the latest in a whopper of a turnaround for the franchise whose precursor, Westchester-based Ameriking Inc., had been in bankruptcy.

The change came in December of 2003, when a group of mostly Hispanic investors led by Miami-based Al Cabrera bought 120 of Ameriking's Chicago area Burger Kings. With the purchase, Heartland became the largest Burger King franchise in the Chicago area, albeit a floundering one.

The franchise, which had been in the red for four years, was profitable again within five weeks, according to Chief Executive Officer Jeff Rogers.

"I've been involved in two or three turnarounds and this is the fastest, most successful recovery I've ever been involved in," said Rogers, who also led successful turnarounds of Texas-based restaurant chains Pizza Inn Inc. and APEX Restaurant Group's Bonanza.

Heartland has a total of 218 Burger Kings in the Midwest and South, with about 4,200 employees. In its Downers Grove headquarters, it employs 60 people.

In the fourth quarter of last year, its comparable store sales grew 22 percent, to an annual rate of more than $1 million a store. Each week, comparable-store sales are rising about 18 percent to 20 percent over the prior year period, Rogers said.

Forty percent of its customers and employees are Hispanic. And it was the first franchise in the chain to issue bilingual coupons.

However, Rogers credits $10 million in renovations and motivational programs for employees with sparking gains.

The back-to-basics management is reminiscent of the turnaround managed on a larger scale by the late McDonald's Corp. CEO Jim Cantalupo. Rogers sees the similarities but shies away from the comparison.

"He was a master of getting employees behind the goals of the company," Rogers said. "But he did something much bigger and more difficult than we have."

Rogers said the new Burger King ownership has put a premium on seeking minority franchise owners. In November, Deerfield-based C.H. James Restaurant Holdings LLC led a group of investors buying 37 Chicago-area restaurants. Owner Charles James said his business is the nation's oldest continuously operating African American-owned business.

Another factor in the Chicago-area Burger King comeback, Rogers said, is the overall turnaround of the company in recent years. Burger King Corp. reported Friday same-store-sales were up 7 percent in February. Overall, 2004 sales rose 18 percent to $1.3 billion at 11,200 restaurants.

In the Chicago metropolitan area, Oak Brook-based McDonald's Corp. has 393 sites, Miami-based Burger King Corp. has 195 sites and Dublin, Ohio-based Wendy's International Inc places third with 151 sites. White Castle and Steak & Shake round out the top five with about 50 each.

Most of the 41 Burger Kings purchased by Heartland on Friday are in southern Illinois and Indiana, the company said.

Heartland is owned by Cabrera's Core Value Group. Burger King is owned by Fort Worth, Texas-based Texas Pacific Group, a privately-held investment firm.

<< BACK