Cowboys mustn’t cry, says Adams
GPI chairman reflects on turbulent times and what faces new CEO
● A call inquiring about a possible position with Grand Parade Investments solved the problem of who to appoint as his successor as CEO, says Hassen Adams, chairman of the investment company that runs Burger King in South Africa.
“I received a call out of the blue based on her wanting to look at an opportunity with GPI and when I googled her I was taken aback by her experience,” Adams told Business Times on Wednesday, after the new CEO, Prabashinee Moodley, was appointed this week.
Adams, who has been the interim CEO following the resignation of Tasneem Karriem earlier this year, said Moodley was looking to come home after having spent a number of years in the US working in executive positions at McDonald’s Corporation and Dunkin’ Brands — one of the food brands for which GPI has the South African licence.
GPI, which was founded in 1997 and listed on the JSE in 2008, originally started as a gaming entity, but since 2013 has expanded into fast food.
“We had all of our eggs in one basket. We had to ask our ourselves about the gaming industry: is it here to stay? How long is the throughput for us going to be? So we then decided to look at other opportunities. We looked at manufacturing, gaming and ventured into the food industry by buying Burger King,” said Adams.
“The problem with Burger King is that if I had known what I had got into, I would’ve never gone into it because it is such a high quality product that you have to have all your ducks in a row.”
At the time of the acquisition, South Africa’s fast-food sector was booming, as many international brands were looking to find their place in the country.
But Burger King failed to deliver, costing GPI more than R600-million, as reported losses continued to strip the investment firm. And then many shareholders began to question the strategic direction of the firm as it deepened its exposure in the fast-food business.
Since the acquisition of Burger King, GPI’s share price has declined more than 50%.
GPI also holds the master franchise agreements for Dunkin’ Donuts and ice-cream and confectionary brand Baskin-Robbins in South Africa as well as a 17.5% shareholding in Spur Corporation that owns the Spur and Roco Mamas franchises.
GPI started as a shareholder in a big gaming entity called Grand West and Sun West Casino, where it holds 15.1% and a 30% stake in Sun slots.
But the shareholders, who bought into the company to get exposure to its gaming entities, have had their feathers ruffled as the companies’ gaming focus has been diluted.
“The problem is that shareholders don’t understand that we are a business that is highly entrepreneurial.
“None of our founding shareholders have ever come to complain to us because without fail every year we pay a dividend, we show profitability and we show a huge growth,” Adams said.
“I’m not going to listen to a bunch of young yuppies who have not even owned a spaza shop and they must tell me how to run a business they don’t care [about] . . . it’s like dogs barking at a moving car.”
Yet the issues at GPI were not just to do with its newly acquired assets.
In the past year, the firm saw three senior executives leaving the company.
Karriem’s resignation came after two other senior members had left GPI — former CEO Alan Keet and financial director Dylan Pienaar. “Anybody would get worried if these executives resigned successively. People were even saying that it’s because of me, that I’m putting too much pressure on them and that I’m asking for a performance beyond their capabilities, which is completely untrue,” he added.
This year, Adams said, Burger King will have 82 restaurants — up from 71. Besides Burger King the group has two other US brands to worry about.
Adams said they were going to slow down Dunkin Donuts’ expansion “substantially, until we understand it”.
"We are looking at bringing in a foreign partner that is successful in Saudi Arabia and Egypt and I would be keen for them to take over Baskin Robbins because they have the expertise. They need to roll out stores quickly,” Adams said.
While he remains optimistic about the future plans for the investment firm as it looks towards a more diversified portfolio, he said in the current environment “cowboys mustn’t cry” when things go pear-shaped.
I’m not going to listen to a bunch of yuppies
Hassen Adams GPI chairman