This year, Restaurant Brands International (RBI) intends to eliminate as many as 400 Burger King locations to shed failing properties from the fast-food giant.
We’ll collaborate with them to get out of the system and pursue other endeavors. In a Q1 earnings call, RBI chairman Patrick Doyle stated, “There is no room for franchisees who are not willing or able to work hard to operate restaurants that are better than the system average over the long term.”
Two significant Burger King franchisees have declared bankruptcy since the year’s beginning, citing declining restaurant visitation and increased operating expenses.
The 118 Burger King locations operated by Meridian Restaurants Unlimited filed for Chapter 11 protection in March. The corporation, headquartered in Utah, runs B.K.s in North and South Dakota, Montana, Wyoming, Minnesota, Nebraska, Kansas, and Arizona.
Meridian said in a court document that it bought sites with below-average sales because it thought doing so would help its performance. According to Restaurant Business, Meridian’s unit volumes are less than the average for the Burger King system, which averages $1.4M per location—roughly $500K less than Wendy’s and half of what the typical McDonald’s makes.
In its petition, Meridian reported that during the last two years, wages at its Burger King outlets have climbed by 33% and food prices by 22%, “without proportionate decreases in rental obligations, debt service and other liabilities.”
TOMS King, a company with ninety Burger King franchisees, filed for bankruptcy in January. Following the filing for bankruptcy, RBI purchased 17 of TOM King’s B.K. locations to sell them to more capable operators.
Burger King operated around 19,000 locations worldwide as of the end of the first quarter, with 6,960 being flame-broiled burger establishments in the United States.
Over the past year, RBI—which also owns the fast-food companies Popeye’s, Firehouse Subs, and Tim Horton’s, a donut and coffee chain established in Canada—has concentrated on growing the Burger King brand abroad. While the number of B.K.s in the U.S. decreased by 124, the business opened 589 international locations.
Burger King unveiled its $400 million revival plan earlier this year, dubbed “Reclaim the Flame,” which includes more marketing and support for remodeling older stores.
According to the RBI, the average store’s earnings before interest, taxes, depreciation, and amortization (EBITDA) decreased by 22% from 2018 to $140K per site in 2022.
How Come Burger King Locations Are Closing?
The CEO of Burger King’s parent company, Restaurant Brands International, Joshua Kobza, claims that closing many locations is not unusual. Kobed, during a Q1 earnings results call, said that historically, “a couple hundred” Burger King locations close annually. In addition to the 124 Burger King stores that have already closed this year, up to 400 more sites could close by the end of 2023.
Kobza and Chairman Patrick Doyle stress that the franchise operators’ commitment will be the main priority. Doyle states of franchisees, “There will always be a minority who aren’t committed, passionate operators.” “We’ll work with them to get out of the system.” To “improve the overall health,” Kobza also says that cooperation with smaller franchises will occur.
Will Burger King Close More Locations?
According to Kobza, it depends on how many 300–400 already allocated stores are closed. Although uncertain, he claims that the company is already starting to recover at a “pace of recovery.”
Michigan First
E.Y. Located mostly in the Detroit metro region, King of Michigan is a Burger King franchisee with over twenty sites in Michigan.
However, the franchisee shut down all its 26 sites in Michigan in March and April. There were 26 locations total, including two in Flint and restaurants around Detroit and its suburbs.
News reports state that the following establishments in Michigan closed:
- W. Warren, 20401, Dearborn Heights
- Detroit, 2155 Gratiot Avenue
- Detroit’s Livernois, 9871
- Detroit’s 8201 Woodward Ave.
- Detroit’s 18021 Kelly Road
- Detroit, 20200 Grand River Ave.
- Detroit’s 13600 W. McNichols Road
- Detroit’s 15500 West Seven Mile
- Detroit’s 20240 Plymouth Road, 12661 Mack Avenue, and 9239 Gratiot Avenue
- E. Warren, 17440 Detroit
- Detroit, 16245 Livernois Ave.
- Ecorse 3863 W. Jefferson Ave.
- Ferndale, 10336 W. Eight Mile Road
- Flint, 3625 South Dort Highway
- Flint, 3801 Clio Road
- Woodward Avenue, Highland Park, 13324
- Livonia, 28203 Plymouth Road
- Livonia, 34835 Plymouth Ave.
- Royal Oak, 31456 Woodward Ave.
- Telegraph Road, Southfield, 23660
- Southfield, 30711 Southfield Road
- Walled Lake, 1113 E. West Maple Road
- Warren, 2411 E. 8 Mile Road
- Whitmore Lake, 9774 E. M-36
Utah
Meridian Restaurants Unlimited, Utah’s home state, was also negatively impacted by the company’s bankruptcy.
The following Utah locations reportedly closed, according to news reports:
- Heber, 171 E. Gateway Drive
- Sandy, 7810 S. 1300 E.
- Sandy’s 10235 S. State St.
- Clearfield, 729 N. Main St.
- Lehi, 1466 East 3500 North
- Crossroads Boulevard, Saratoga Springs, 119 E.
- Draper, 147 E. Bangerter Highway
- Roy’s 5390 S. 1900 West
- Salt Lake City, 1660 W. North Temple Street
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Mont
In Montana, three Meridian Restaurants Unlimited-owned Burger King locations closed.
News reports state that the following establishments in Montana closed:
- Lewistown: 1422 West Main Street
- Billings: 520 North 27th Street
- Columbia Falls, 1211 9th St. W.
In those communities, the only Burger Kings were in Lewistown and Columbia Falls. However, there are also other places in Billings that locals may enjoy.
The state of Nebraska
Three Burger King stores in Nebraska were also forced to close due to Meridian Restaurants Unlimited’s bankruptcy filing.
The following establishments in Nebraska reportedly closed, according to news reports:
- York, 3627 S. Lincoln Ave.
- Street, Lincoln, 2504
- Lincoln, 4230 N. 27th St.
Kansas
Meridian’s April bankruptcy petition also included the closure of a site in Kansas.
The facility in McPherson, Kansas, located at 2201 E. Kansas Ave., was approximately one hour’s drive north of Wichita and situated along Interstate 135 in central Kansas.
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North Dakota
Meridian’s bankruptcy also resulted in the closure of a location in Grand Forks, North Dakota, at 3765 Gateway Drive.
However, there are still Burger King restaurants in the city accessible to locals, one of which is located at Grand Forks Air Force Base.
Colorado
The Burger King, located at 1902 Mountain View Drive, has to depart from Cody. It also suffered as a result of Meridian’s bankruptcy.
FAQ Section
Why did Burger King decide to shut down 400 locations?
Examine the elements that influenced Burger King’s calculated decision.
What effects will the closure have on the Burger King staff?
Examine the steps taken to assist the impacted employees.
Are there any intentions to open additional Burger King restaurants elsewhere?
Discover Burger King’s plans for future growth amid closures.
In what way are rivals reacting to Burger King’s shop closings?
Examine the opportunities and the competitive environment.
What financial effects will Burger King experience as a result of the closure?
Analyze the data and comprehend the financial reorganization.
In what ways is Burger King adapting to shifting consumer tastes?
Examine the brand’s tactics to make sure they suit changing consumer preferences.
In Summary
In summary, the 400 Burger King locations closing represents a turning point for the fast-food sector. The ultimate effect on Burger King’s future will only become apparent over time as the brand navigates difficulties and adjusts to shifting circumstances.