Burger King slapped with 82 per cent increase in import duties
Barbadians will soon have to dig deeper into their pockets for some of their favorite Burger King meals, with the international fast food chain blaming a steep rise in import duties.
The company said it has been slapped with a whopping 82 per cent increase in import duties, which will result in price increases in the coming days.
The duties on some of its processed chicken products, including its popular chicken breasts, patties and nuggets, which local producers cannot supply, rose from 20 per cent to 102 per cent at the beginning of September.
General Manager Ryan Walters told Barbados TODAY while the company had been absorbing that cost for the past three months, it could no longer afford to do so since it was taking a massive financial hit as a result of the dramatic increase in the duties.
“We are now at a stage where we can’t bear the full brunt of the cost anymore. We have no alternative but to pass on some of the cost to our customers,” Walters said, without indicating when the price hikes will take effect or how much more it will cost customers.
Walters also declined to say how much the company was currently losing as a result of the increased duties, although he stressed it was having “a tremendous impact”.
The general manager explained that while Burger King sourced most of its inputs from local producers, the processed items were not available locally.
“Essentially we have to produce products to a certain specification. As it stands now there is no local entity that can do that, so we have no choice but to procure those specific products from approved suppliers outside of Barbados,” Walters told Barbados TODAY.
He said the local franchise holders Restaurant Associates Barbados Ltd were in discussions with a local producer in a bid to have the meat processed here to international specifications.
This would mean the producer having to purchase the relevant equipment, but it could be a lengthy and costly process, he said.
“We are engaged with a local producer who has already started the process in terms of seeing if they would be interested in procuring the necessary equipment and aligning their operations to be able to start manufacturing these products. But it would require some capital investment.
“That process would probably take about 12 to 18 months to be completed . . . . The affected products are BK Core products and wherever you visit a Burger King in the world you will get these products. They can’t be made here at this time so we are not just importing things that can be done here,” he explained.
“From inception, we have made every effort to support the local industry and we have committed to this. From 2013 to present our local purchases with major suppliers increased by over 100% of which 30% of the increase is representative of purchases from the local manufacturing sector. Additionally, we now employ over 150 persons; this makes our growth of new jobs the highest in Barbados in each year since we started.
“Our growth has also allowed us to contribute almost six million dollars to government agencies over the period” Walters added.
He said “if the Government is unwilling to return the duty to 20 per cent it is unlikely that Burger King will be able to build the next three restaurants that are in the planning stages for the next 18 months. Our owners want to invest more in the Barbados economy and create more jobs but the increase in duty is killing their enthusiasm”.
“We might even have to reconsider our existing operations, our staff levels and so forth,” the Burger King executive told Barbados TODAY.
The relevant authorities have already been written to requesting a reduction, and the company had been asked to outline its economic contribution to the country, he said.
“So there is some dialogue going on, but obviously time continues to fly and we continue to pay the duties on each container as they enter our ports” Walters said.
He said the company would not be reckless but will carefully “manage what we pass on because we cannot expect people to pay way beyond the value of a product to protect local producers that will not produce the products that our customers want”.
Over the past two years officials in the local poultry industry intensified their calls for Government to increase tariffs on imported poultry products in an effort to protect the local market.
As it related to its overall performance, Walters said Burger King had witnessed an increase in sales year on year, adding that people were responding positively to the brand.
“We have had a very encouraging response at Warrens. Sky Mall continues to be the leading restaurant and we are holding our own in terms of customer traffic at the other locations,” he said.
Walters concluded. “We are in no way trying to deceive or cheat the local producers or the government, all we ask is to be given the opportunity to continue to transition to local production overtime which will help boost the economy. This obviously is not an overnight task but we want to be treated fairly during the process”
Burger King officially started operations in Barbados in January 2013 at Sky Mall in Haggatt Hall, St Michael.