The share price for Restaurant Brands New Zealand Limited [NZX:RBD] has rocketed by over 6% in trading today, up to $13.10.
Restaurant Brands is the country’s leading fast-food company. It controls the franchising rights to popular brands such as KFC, Pizza Hut, Carl’s Jr., and Taco Bell.
The company currently has a market cap of $1.53 billion.
Why has the [NZX:RBD] share price risen?
Investor sentiment has been enthusiastic today. It comes after a cheerful announcement:
Some key takeaways:
- Restaurant Brands is venturing into the mainland United States for the first time, purchasing a franchise in Southern California.
- This will involve the acquisition of 59 KFC and 11 Taco Bell outlets.
- This deal was inked with master franchisee Yum! Brands [NYSE:YUM] for NZ$112 million.
Where could Restaurant Brands go from here?
The current mood in the market is optimistic. Punters are hoping that this overseas expansion will bode well for the company’s long-term prospects.
However, several key risks remain:
- This deal needs to be officially ratified by Yum! Brands before it can move forward.
- Landlord approval for the store leases are still pending.
If these two minor hurdles can be overcome, Restaurant Brands could be in for a tasty treat.
The combined revenue for these fast-food outlets in California is estimated at NZ$143 million annually.
This justifies the increased debt load that the company is pouring into this venture. The stock price may be primed for an upward trajectory if all goes well.