Hong Kong-based private equity firm Affinity Equity Partners (AEP) that bought Burger King Korea early last year has taken over Japanese operations of the American hamburger chain restaurant.

According to the investment bank industry on Monday, Affinity Equity Partners signed a contract with Burger King parent company Restaurant Brands International Inc. (RBI) to acquire the master franchise right for Burger King Japan.

A master franchise is a franchising contract in which a master franchisor, the owner of the brand name, hands over the control of its franchising business in a specified territory to a person or entity called a master franchisee.

Under the contract, the private equity firm obtains the rights to operate Burger King outlets in Japan for the next two decades. It is said to be seeking to apply its business know-how that has helped to revive the business of Burger King Korea.

Currently, the fast-food chain runs only 100 stores in Japan, trailing behind McDonald`s Japan that operates about 3,000 restaurants. Japan is the only market in the world that shows such a large gap between the two global fast-food chain brands.

Affinity Equity Partners acquired Burger King Korea at 210 billion won ($186 million) in February last year and has aggressively added new branches since then. At the end of 2015, the number of its stores in Korea was 240 and now it has risen to 300, narrowing the gap with McDonald`s Korea with 431 stores. Under the new ownership, the Korean unit of Burger King has successfully maintained profits with its annual net profit hovering around 8 billion won while its peers has been suffering from losses.

The Hong Kong-based buyout fund is expected to introduce a self-service machine that has been installed in Burger King Korea stores at Burger King stores in Japan after completing the acquisition process. It is also expected to reduce costs by purchasing food materials like beef for the operations in the two countries at once. It currently plans to add more than 200 stores in Japan over the next five years with an initial investment of about 50 billion won.

The fund is also said to be considering the Korean and Japanese operations in a package deal later.

By Lee Hee-soo and Lee Ha-yeon

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