Financial Woes Drive Another Big Burger King Franchisee To File For Bankruptcy
Adult foodies may have a fully-developed neurological sense of object permanence – but, when it comes to long-standing pillars of the food world, it can be difficult to imagine that they'd ever go anywhere. Now, however, a second major Burger King franchisee has filed for bankruptcy.
In a lot of ways, the past few months have been lighthearted for B.K. and its fans. Last November, the fast food giant gave away 65,000 free Whoppers in Times Square in honor of its 65th birthday. Since the start of 2023, Burger King has brought back its fan-favorite Spicy Chicken Sandwich and added all-new Spicy Chicken Fries to the menu. But, this latest news puts a grimmer taste in consumers' mouths.
In September 2022, Burger King announced the details of a $400 million two-year plan to kickstart sales and breathe new life into the brand. A few years prior, 2019's launch of the Impossible Whopper failed to bring the lasting revitalization the chain had hoped for; sales had already marginally slowed by 2020. But, this new comprehensive overhaul was set to include extensive restaurant renovations, menu updates, and a fresh ad campaign. The plan was admittedly a long game: According to company estimations, investors wouldn't start seeing the payoff of these changes until 2025. Right now though, 2025 is still two years away, and the chain's current state is looking rocky at best.
Hungry for a turnaround
Last week, Meridian Restaurants Unlimited filed for Chapter 11 bankruptcy protection, reports Restaurant Dive. Meridian owns more than 115 Burger King restaurants, staffed by 2,495 employees across nine U.S. states. What led to the move? As for so many U.S. consumers, Burger King is feeling the cold sting of inflation, says the company. Shipping and food costs are going up, and employee wages subsequently also need to be raised in order to keep up with the ever-increasing cost of living in an economic recession. Foot traffic, says B.K., is also way down. In 2009, Burger King raked in global sales of $2.54 billion. By stark comparison, sales only hit $1.89 billion in 2022 — and that was the highest-grossing sales year since 2012. Restaurant Dive estimates that Meridian is currently looking at $14 million in unsecured debt.
In January, TOMS King Holdings (another major Burger King franchisee) sought bankruptcy protection, affecting 90 stores across Illinois, Ohio, Pennsylvania, North Carolina, and Virginia. Combined, the Meridian and TOMS bankruptcy filings impact more than 200 Burger King locations. According to data company ScrapeHero, as of February 2023, there are 7,257 total B.K. restaurants in the U.S. Luckily for fans, 200-plus shaky stores only represent about 3% of Burger King's total operating body. Still, it's not great news for the company.