010837 Burger King Suspends S. American Investments

Buenos Aires, Argentina - Fast-food chain Burger King has postponed its investments in Argentina, Chile and Paraguay for at least two years due to economic problems in the region, a company official said in an interview on Friday.

Citing disappointing sales growth as South American economies sag, Burger King will suspend a planned $30 million investment, said Pablo de los Heros, vice president of Fastfood Sudamericana, which operates the Burger King brand in Argentina.

“We've taken a very cautious stance,” he said. “This delay is linked to the recessive context (in Argentina) that is affecting neighboring countries.”

Burger King's decision echoes a regional trend in the fast-food industry. Last November, Wendy's closed its 18 restaurants in Argentina after the company lost $6.2 million over a nine-month period.

In June, McDonald's Corp. said it had decided to cut its planned investments in Argentina by 75% due to a strong drop in sales.

Argentina's economy is mired in a three-year slump, and uncertainty over the country's ability to pay its debt has scared off investors around Latin America.

Many analysts worry an Argentine debt default would set off a regional crisis similar to that caused by Mexico's “Tequila” crisis in the mid-1990's when that country's peso fell sharply.

De los Heros said the $30 million investment had been planned to open up 15 restaurants a year.

“We're not growing at the rate that we'd like and that we'd planned on,” De los Heros said.

“The potential for business (in South America) is enormous despite the challenges and economic difficulties,” De los Heros said. “Burger King will continue growing in the region.”

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