Burger King Believes Its Mass Restaurant Closures Are Finally Over
Burger King's store count has shrunk significantly in recent years as the burger chain contended with lagging sales and struggling franchisees. But as the chain looks to the future, it believes those mass closures could finally be a thing of the past.
Restaurant Brands International (RBI), the parent company of Burger King, Popeyes, Tim Hortons, and Firehouse Subs, released its results for the fourth quarter of 2023 and the full year on Feb. 13. RBI revealed during a subsequent earnings call that Burger King's total net restaurants declined by 3.7% throughout the year. This means that the chain shuttered close to 300 locations during that period, Restaurant Business Magazine reports.
The loss of so many Burger King restaurants isn't a complete surprise since the chain has historically closed a couple of hundred locations in the United States each year, as RBI CEO Josh Kobza revealed during a previous earnings call. Kobza also predicted last May that Burger King would shutter between 300 to 400 locations in 2023. These closures were part of a longer-term Burger King strategy to clean house and eliminate struggling stores to improve the overall health of the chain—which became all the more important after several Burger King franchisees declared bankruptcy last year.
Now, RBI executives believe that the bulk of these Burger King closures are finally over. This doesn't mean that Burger King won't close additional restaurants in 2024 and beyond. But it does mean that the number of future closures likely won't be nearly as high as in recent years.
"We believe most of these closures are behind us and expect a more normalized level of closure activity in 2024," RBI CEO Josh Kobza said during yesterday's earnings call.
The potential end of Burger King's mass closures wasn't the only positive takeaway from the chain's latest earnings report. Burger King is currently in the midst of a massive $400 million "Reclaim the Flame" investment campaign, which it has been using to modernize its brand, enhance its kitchens, remodel hundreds of restaurants, develop innovative new menu items, and ramp up advertising. Data shows that these efforts already seem to be paying off.
Burger King saw a positive increase in customer traffic in the fourth quarter of 2023 for the first time since 2021, QSR Magazine reported. The chain also saw a noteworthy 7.4% increase in same-store sales in 2023, while the profitability of its franchisees increased nearly 50%.
"That increase in profitability is not only important in the absolute, but it's important in the belief of our franchisees and what they're going to be able to accomplish with the brand. So you can feel that momentum building around [Burger King] in the U.S.," RBI Executive Chairman Patrick Doyle said during the earnings call.
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