Hawai'i KFC owner bids on Burger King stores
By Andrew Gomes
Advertiser Staff Writer
The Hawai'i operator of KFC restaurants is proposing to buy roughly 20 local Burger King stores as part of the bankruptcy reorganization of one of the largest private Burger King franchisees in the country.
Zubair Kazi of California-based Kazi Foods Inc. struck a deal to buy between 14 and 20 Hawai'i Burger King stores from Cimm's Inc., a Glendale, Calif.-based Burger King franchisee that filed for Chapter 11 in California last July.
The deal was up for approval at a court hearing Friday, but was continued to next Monday.
An attorney for Cimm's declined to discuss the case yesterday. Kazi Foods also declined comment, citing the ongoing status of the bankruptcy. Cimm's officials could not be reached.
According to a purchase agreement filed in court, Kazi has offered to pay roughly $2.6 million for the stores.
Kazi, through newly formed Kazi Restaurants of Hawaii Inc., would also spend $1 million on operating expenses for the stores, and hire "all or substantially all" of the employees currently working at the restaurants to be acquired, according to the filing.
Although Kazi is proposing to buy 17 stores, he has an option to exclude restaurants in Kapolei, Wai'anae and Pearl Harbor from the purchase. He also has an option to add restaurants in 'Aiea, Hawai'i Kai and Wahiawa to the deal.
One other store not part of the proposed Kazi purchase, a 2 1/2-story leasehold Burger King store at the corner of Kalakaua Avenue and Lewers Street in Waikiki, was scheduled for an auction in court yesterday, but no information could be obtained about that sale effort.
The Waikiki store, listed for $2 million, is the most valuable Hawai'i real estate asset of Cimm's.
The 17 stores sought by Kazi bring in annual revenue of about $22 million, according to court filings. Kazi is proposing to pay the debtor about $2 million in cash, plus roughly $700,000 to store landlords who have claims against Cimm's.
Cimm's co-owner Ralph Cimmarusti said in a filing that Kazi offered to pay more than anyone else for the bulk of the company's Hawai'i restaurants, and is more than qualified as an operator.
Kazi stated in a recent declaration on file with the court that he anticipated Burger King Corp. would sign a formal agreement to assign his company the Hawai'i franchise of Cimm's.
"Burger King Corp. has told us that it favors and approves the sale of the 17 Hawai'i Burger King restaurants to (Kazi Restaurants)," Kazi stated.
Kazi Foods is the nation's second largest KFC franchisee, with 159 KFC restaurants, including 27 in Hawai'i, and annual sales of $135 million.
Kazi bought his first KFC outlet in 1976 and became popular with KFC Corp. executives for turning around money-losing stores on the Mainland. Kazi entered the Hawai'i market in 1997 when he acquired 29 restaurants from KFC Corp., then a unit of PepsiCo. Inc.
Cimm's has been a Burger King franchisee since 1976, and expanded to Hawai'i in 1994. The company, with reported annual revenue of more than $100 million, operates roughly 130 Burger King restaurants.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
