Burger King, one of the leading fast-food chains in the United States, is set to undergo extensive restaurant renovations with an investment of $300 million. This move comes as part of a broader turnaround effort initiated by the chain’s parent company, Restaurant Brands International. The company had previously allocated $250 million for restaurant renovations and technology upgrades, along with an additional $150 million for its mobile app and advertising.
To expedite the remodeling process, Restaurant Brands International recently acquired Carrols Restaurant Group, Burger King’s largest U.S. franchisee, for $1 billion. This acquisition is expected to facilitate the renovation of 600 Carrols’ locations, with an estimated expenditure of $500 million. Including the latest investment announcement, Restaurant Brands International plans to spend approximately $2.2 billion on revitalizing Burger King’s U.S. business.
The company aims to have 85% to 90% of its roughly 7,000 U.S. restaurants feature a modern design by 2028. Burger King U.S. President Tom Curtis expressed his enthusiasm about this significant capital investment, stating, “It was the first time in a long time that RBI had invested a significant amount of capital back into the business to co-invest with franchisees.” Curtis also highlighted that early results from the remodeled locations have shown increased sales.
Around 100 Burger King locations have already undergone renovations and updates, with positive outcomes observed in terms of sales growth. The upcoming remodeling efforts will adopt Burger King’s new “Sizzle” design, which includes drive-thru pickup for mobile orders and self-order kiosks. These new features are anticipated to enhance customer convenience and drive further sales of popular items like Whoppers and fries.
However, Burger King has encountered challenges in incentivizing franchisees to participate in the remodeling process. Renovations can be expensive, especially considering high interest rates, and often require temporary closure of the locations. To address this, Burger King has offered financial incentives to franchisees. Those who choose to remodel their locations will receive cash once construction is completed. Additionally, operators will have the flexibility to determine the discount they receive on the royalties paid to the company.
To promote the remodeling strategy and facilitate franchisee participation, Burger King U.S. President Tom Curtis will embark on a roadshow across the country, starting on Tuesday. This roadshow aims to pitch the benefits of remodeling and initiate the sign-up process for the $300 million investment.
While the news of Burger King’s extensive renovations is promising, Restaurant Brands International recently reported weaker-than-expected earnings. However, the company’s quarterly revenue exceeded Wall Street estimates. Burger King’s same-store sales experienced growth of 3.8% in the first quarter, slightly below StreetAccount estimates of 4.1%.
In conclusion, Burger King’s commitment to investing $300 million in extensive restaurant renovations demonstrates the company’s dedication to enhancing its brand image and customer experience. The remodeling efforts, following the new “Sizzle” design, are expected to boost sales and drive further growth for the fast-food chain. With franchisees being incentivized to participate in the remodeling process, Burger King aims to revitalize its U.S. business and establish a modern and consistent look across its locations.
