During an earnings call earlier this week, the CEO of Restaurant Brands International Inc., the parent company of Burger King, stated that he plans to close between 300 and 400 underperforming stores this year to streamline the fast-food brand.
“Historically, we’ve closed a couple of hundred units at Burger King US,” CEO Joshua Kobza said in a Q1 earnings call on Tuesday. The expected closures this year appear to be well above average.
In the first three months, several Burger King franchisees have declared bankruptcy, including Illinois-based Toms King, Michigan-based EYM King, and Utah-based Meridian Restaurants Unlimited.
Kboza said, “Traffic was modestly negative this quarter,” but noted an improvement in year-over-year traffic trends from Q4 into Q1.
Burger King has shuttered a net total of 124 US locations, a 1.7% reduction, leaving just 7,000 US restaurants at the end of the quarter. More closures are anticipated in the coming months.
The brand’s $400 million “Reclaim the Flame” bet to regain market share and wind down underperforming restaurants might be working — as it delivered comparable sales of 8.7% year-over-year for the quarter.
Additionally, the brand strives to simplify its overly complex menus and operations. Though raising costs on the iconic Whopper could be determinantal to future sales as rival McDonald’s recently found out that higher menu prices led to a pushback from consumers.
Not everyone can afford a $9 burger…
McDonald’s diners pushing back against price increases in some markets: CEO
Paying $9 for a dollar meal hamburger the last straw?
— zerohedge (@zerohedge) April 25, 2023
And while Burger King trims stores and becomes leaner, it must realize consumers have been battered with 24 months of negative real wage growth. Any price increases might jeopardize its turnaround plan, as some consumers have now traded down fast food restaurants for “Dollar Tree Dinners.”
Burger King did go ‘woke’…
So let’s see how this turnaround strategy pans out.
Tyler Durden
Sat, 05/06/2023 – 16:00
