Burger King

The secretive Brazilian billionaire who owns Burger King, Budweiser and Heinz

Andrew Wilkinson's Billy of the Week is Jorge Paulo Lemann, the press-shy Brazilian behind 3G Capital, who buys old, simple, multi-generational brands using piles of debt and runs them better.

“if you think about the businesses that he owns, uh, you would know them. So for Burger King, Budweiser, Tim Hortons, Kraft Foods, Popeyes, Heinz Ketchup, right? So he basically goes out, he finds these amazing, you know, multi-generational businesses that have been around for 50+ years that do something very, very simple. It's just going to grow over time. He goes out, he usually raises a ton of debt, and then he goes and buys them and takes them over.”

Costs are like fingernails — you have to cut them constantly

Lemann's frugality is legendary: 'costs are like fingernails, you have to cut them constantly.' At Burger King 3G banned color photocopies, allowing only black-and-white printing.

“he's like, costs are like fingernails. You have to cut them constantly. And he would do famous things like when they bought Burger King, they banned color copies, meaning when you're using the photocopy machine, uh, he was like, just black and white only.”

The one-thesis acquisition: buy on a single insight

Wilkinson's acquisition rule is to enter each deal with one clear thesis (e.g. margins should be 15% not 5%). With Burger King, 3G's single insight was to spin out and franchise corporate-owned locations to pay off the debt.

“we've seen this in our own investing, like often having one thesis, right? So the thesis could be, hey, margins are really shitty. You know, they're, they're 5%, they should be 15%, and we can do that via, via very simple improvements or something simple like this Burger King deal where they went into big debt and they actually paid up a really high price to do it. But the insight they had was, well, as soon as we take over, we're just going to spin out all of our corporately owned locations and franchise them. And by doing that, we're going to raise all the money to pay off our debt.”

Steal thisEnter every acquisition with one clear value-creation thesis you can execute, not a vague hope of improvement.