Fast food chain Burger King is set to close up to 400 locations across the country this year, with the under-performing ones being the first to go.
According to the Daily Mail, Burger King CEO Joshua Kobza confirmed the closures after the company announced its results for the first quarter of 2023. The earnings release noted that from the start of the year until March, Burger King closed 124 locations – leaving 6,964 restaurants still operating. This is a historic high, said Kobza, as the fast food chain usually closes a couple of hundred stores annually.
However, the CEO clarified that not all of the 300 to 400 locations set to close this year have been revealed. He also admitted that there is "a fair degree of uncertainty" around the plans. Sales performance can vary greatly between Burger King locations; one poorly-performing location could see things turn out in its favor the next month.
The company is seeking additional franchisees with stronger finances this year, according to Burger King Chairman Patrick Doyle. He also hinted at the possibility of under-performing franchisees being axed.
'There will always be a minority [of franchisees] who aren't dedicated, enthusiastic operators. We'll work with them to leave the system and move on to do something else," Doyle said. "There simply 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." (Related: Restaurant industry collapsing across the US, with several popular chains permanently CLOSING DOWN numerous locations.)
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Established in 1953, Burger King ranked second to McDonald's as America's largest burger chain for a long time. Wendy's took over that spot in 2020, moving Burger King a notch lower.
Several Burger King franchisees file for bankruptcy
Doyle's insinuation that poorly-performing franchisees will be separated from the parent company came amid several Burger King franchisees filing for bankruptcy and closing locations.
Back in March, Meridian Restaurants Unlimited (MRU) filed for bankruptcy after reportedly incurring $14 million in debt. It cited rising food costs and poor sales at over 100 locations it operates as a major reason for the filing.
MRU will close 27 locations across seven states – including Minnesota, Montana and Utah – as part of the filing. It said that more store closures were "possible, if not likely" as it negotiated the rent and operational improvements with landlords.
Also in March, Michigan-based franchisee EYM King announced the closure of 26 restaurants across the Great Lakes State. The franchisee said it would lay off 424 staff members as it geared up to close the restaurants through April. In a letter to the Michigan Department of Labor and Economic Opportunity, EYM King said it had failed to reach an agreement with the parent company – leading to the closures.
Other struggling Burger King locations were sold off and acquired by bigger counterparts. Toms King filed for Chapter 11 bankruptcy protection in January. It was later sold out for $33 million, alongside the 90 restaurants it operates.
DC Burger is expected to purchase 37 stores in Virginia for $22 million. Karali Group is reportedly set to pay more than $7 million for 27 spots in Ohio and Pennsylvania.
Despite the series of closures, the company reported that its comparable sales rose 8.7 percent in the first quarter of 2023. Burger King also expressed hope that its $400 million "Reclaim the Flame" turnaround plan may be starting to work. Launched in September 2022, the plan seeks to accelerate sales growth; drive franchisee profitability; revive run-down restaurants and streamline overly complicated menus and operations.
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Watch this video about Burger King requiring diners to show photo IDs, part of its pandemic-era guidelines.
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