Burger King Is Closing Hundreds of Locations This Year
After experiencing lagging sales and losing favor among customers in recent years, Burger King embarked on an ambitious comeback mission in 2022. But the road to recovery for the fast-food giant is paved with hundreds of restaurant closures.
Burger King's parent company Restaurant Brands International (RBI) announced its latest quarterly results for the burger chain late last week, including a 6.6% increase in same-store sales in the United States and system-wide sales growth of 10.3%. But in an earnings call with investors on Nov. 3, executives revealed that Burger King's total restaurant count declined by 2.8% over the past year, equivalent to nearly 200 locations, per Restaurant Business Magazine.
Mass restaurant closures aren't exactly new for Burger King. RBI CEO Josh Kobza said during another earnings call in May that the chain has historically shuttered a couple hundred locations in the United States each year. But while the loss of nearly 200 restaurants over the past year may seem like a sign of extra trouble for the chain, Burger King believes the closures are necessary to set up the brand for long-term success.
Kobza said during the Nov. 3 earnings call that the 2.8% decline in restaurant count came as Burger King closed "older and lower performing restaurants to support a more modern system increasingly run by better operators." In other words, the company has been shuttering struggling locations in order to make the Burger King system healthier as a whole. Burger King has also been working to transition restaurants run by struggling franchisees into the hands of stronger, more experienced operators—which has become especially important after a string of franchisees went bankrupt earlier this year.
Meanwhile, the company is also smack dab in the middle of its massive $400 million Reclaim the Flame investment strategy aimed at improving the Burger King brand and image. The initiative includes more advertising, restaurant remodels, and modernized branding, among other elements. Now that Reclaim the Flame has been underway for about a year, the company says they've already seen more success than anticipated.
"We're one year into the Reclaim the Flame plan and frankly made more progress improving franchisee profitability and traffic in this one year than originally expected," RBI Executive Chairman Patrick Doyle said.
Burger King customers may see even more restaurants close before the end of 2023, since the chain revealed during its previous earnings call in May that it will likely shutter between 300 to 400 for the full year. Still, the company is encouraged by its Reclaim the Flame progress and the switch to stronger franchisees.
"We are taking a victory lap by any means," Doyle said.