Grand Parade: When you can’t run a business, don’t run one
Group’s shift from being a relatively passive investor to having operational control has been a disaster
Empowerment investment group Grand Parade Investments (GPI) may be on the mend. Its food division is still incurring losses, but it expects its fast-food chain Burger King to turn a profit well before the end of the 2020 financial year.
News that it’s also looking to bring in an outside shareholder for Burger King, once the chain starts turning a profit, will see it returning to what its best known for – holding a sizable minority interest in lucrative businesses.
For a long time GPI was well known for its holdings in gambling concessions in the Western Cape. But then in 2013 it got the rights to operate Burger King in SA. This saw it shifting from being a relatively passive investor to having operational control of a business.
Sadly this was a costly mistake for GPI. For example, its investment in chains Dunkin’ Donuts and Baskin-Robbins never turned a profit in the three years it ran them and ended up costing the group R50m to shut them down.
Although the group’s prospects are improving, it still has a long way to go to regain the confidence of investors. The loss of faith in GPI can be seen in its share price falling from a high of R7.75 in October 2014 to its current valuation of R2.50.