Burgerfuel scolded for Upper Hutt; partners with another US franchisor

Fast food chain given $32,000 cash incentive by council to establish an Upper Hutt outlet.

BurgerFuel [NZAX: BFW] is getting some love from overseas but hate from a local tax watchdog.

The gourmet burger chain has opened an Upper Hutt outlet and the Taxpayers’ Union is asking why BurgerFuel was given a $32,000 cash incentive by the city council to establish the restaurant.

“This is possibly the most ridiculous example of corporate welfare we’ve seen yet. You work hard, you pay your rates and Upper Hutt City spends it on a burger joint,” Taxpayers’ Union executive director Jordan Williams says.

“Sucking money out of a community to spend it on a favoured business isn’t economic development, it’s robbing the poor to pay the rich. Money that would have been spent by citizens has been funnelled into the pockets of BurgerFuel’s investors."

In a press release, the council says the incentive is part of a scheme aimed at encouraging new business into the city.

Businesses that want to set up in the city can apply for a “package,” which can include grant funding, as well as discounts and, in some cases, cost waivers on council services.

BurgerFuel Australasia general manager Craig Notman says it is the first time the company has worked with a council that has such a “proactive stimulus package for its region.” The Taxpayers’ Union says this implied BurgerFuel “couldn’t believe its luck.”

The new store employs 13 people.

While BurgerFuel refused to comment on the criticism, it is upbeat about its partnering with another company in the Subway network ahead of its US expansion plans.

In an announcement to the NZX, BurgerFuel says it has partnered with California-based OhCal Foods, a franchise developer for Subway, to spearhead its entry into America.

It further cements Burger Fuel’s synergy with Subway after it signed a deal with Franchise Brands early last year. The restaurant chain also has outlets in the United Arab Emirates, Saudi Arabia, Egypt, Kuwait and Australia.

Chief executive Josef Roberts would not answer NBR's questions about where the first store would be opened in the US or list the burger chain’s preferred states.

However, it has previously been reported that California, Texas or Connecticut are possible entry points.

In early 2014 Mr Roberts had ambitions to open a store within 12 months but those have now been shifted toward the end of this year.

“We found the US market required considerable analysis to ensure we launch there with a successful, scalable model that has been tailored to the needs of the market,” he says.

“We also wanted to invest the time required to maximise the relationship with Franchise Brands and ensure we teamed up with [franchise developers] that have proven track records and are passionate about our brand. This is where OHCal Foods comes in.”

The announcement caused BugerFuel’s shares to rise 21% to $3.50 yesterday.

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