BurgerFuel to exit Iraq as war looms
New Zealand-based fast-food franchise BurgerFuel is set to shut up shop in Iraq, after the master licensee closed its remaining locations in Baghdad.
Citing mounting turmoil in the region the ongoing threat of war as the key motivations behind the exit, BurgerFuel told shareholders that while the period did enjoy a period of stability a few years ago, the situation had progressively worsened.
“Given the ongoing turmoil and recent escalation of major potential warfare, the company saw no prospect of operating in Iraq in the future,” BurgerFuel company secretary Mark Piet said in an announcement on the NZX.
The store closures will have no material impact on the chain’s earnings, Piet said.
BurgerFuel made its first foray into the Iraqi market back in 2012, signing a master license agreement with a consortium that also operated Pepsi Iraq.
The presence quickly grew, however rising economic instability and the looming threat of war have hampered the BurgerFuel Iraq venture.
Just last week, a US missile strike killed Iranian general Qasem Soleimani, kicking off a backlash against the US and its troops in the region.
On Thursday, Iran launched more than a dozen ballistic missiles to destroy the US military base that fired the strike against Soleimani, though timed the attack to minimise casualties according to the BBC.
Iranian foreign minister Mohammad Javad Zarif said the attack was in self-defence, and was proportionate under the UN Charter.
“We do not seek escalation or war, but will defend ourselves against any aggression,” Zarif said.
It’s not the only high profile exit BurgerFuel has made in recent times. The burger franchise also made the decision to pull out of Australia in late 2018, closing all franchised stores, after finding it too difficult to achieve reasonable operating margins, despite efforts to move towards profit.
The move resulted in a 4.5 per cent drop in total system sales, including sales from franchised stores, in the first half of FY19 to $50.3m. BurgerFuel now only operates stores in New Zealand, Saudi Arabia, the UAE and the US.