Burger King's $400 Million Plan To Restore Slumped Sales
Whether you enjoy fast food or not, the quick, affordable meals served up by these mega-chains are as integral a part of the dining landscape as casual cafés and white-tablecloth restaurants. This is perhaps even more apparent over the past year, as data from Placer.ai reveals that in the midst of pandemic recovery and record-breaking inflation, American eaters have been "trading down" to lower-priced food options.
But it's only certain chains that have retained or grown their foot traffic, among them McDonald's and Chipotle, the latter company reporting a 36% increase of in-restaurant sales during the quarter ending in June, and the opening of 42 new restaurants during that time (via Chipotle's website). The burger behemoth, Burger King, hasn't fared as well recently, reporting flat U.S. sales that lag behind rivals McDonald's and Wendy's. In fact, Wendy's leapt over BK in 2020 to become America's second-leading fast-food chain by sales and held on to that title in 2021 (per The Washington Post). Now, Burger King says changes are coming with a pricy plan to revamp the brand and its restaurants.
Burger King putting $400 million down to revive lackluster sales
Fast-food giant Burger King hasn't been performing well lately — and the company intends to try to recoup lagging U.S. sales by revamping its advertising strategies and restaurant locations (per CNBC). The outlet explains that last year, former Domino's executive Tom Curtis stepped in as BK's new North America president, instituting such changes as paring down the chain's menu for faster drive-through times and promoting sales through its mobile app.
But Friday, at the brand's annual franchisee convention held in Las Vegas, Nevada, Burger King announced some much bigger changes that will be put into place over the next two years and cost a whopping $400 million (via CNBC). Of that price tag, $200 million will go towards funding remodels of about 800 store locations, $120 million will be added to the chain's U.S. advertising budget, $50 million will go toward the installation of updated equipment and tech in 3,000 locations, and $30 million will be invested into the improvement of BK's mobile app, according to The Washington Post.
Renovated restaurants generally see an increase in sales
According to CNBC, remodeled Burger King restaurants have historically brought in an average 12% increase in sales in their first year, and continue to outperform older locations over time. Therefore, it makes sense that the chain's newly announced revamp will focus the bulk of its financial investment on this project. "We might see remodels start to hit the market mid-2023 and going forward. It should really be a gradual ramp of the business over the course of the couple of years," Jose Cil, CEO of Restaurant Brands International, which owns Burger King, told CNBC.
The chain has more than 7,000 locations across America, the majority of which are privately-owned franchises. Since store renovations can be costly and necessitate the closing of a location for a long period of time, the chain will be offering cash rewards to operators who choose to renovate their restaurants. "Every restaurant is a snowflake," BK North America president Tim Curtis told The Associated Press. "We will look at which projects will generate the best return and prioritize them first."