Burger King to shut 400 US locations by end of 2023
Burger King will close up to 400 locations nationwide by the end of 2023 as the fast food giant faces tough competition in the marketplace from the likes of McDonald’s and Chipotle.
While Burger King has been adding restaurants and growing comparable sales internationally, in the US it has struggled with bankruptcies by two big franchisees.
In the first quarter, Burger King closed a net 124 US locations, or 1.7%, to end the quarter with just under 7,000 US restaurants, according to the earnings release from its parent company Restaurant Brands International.
This year, the brand is seeking additional franchisees with stronger finances but still expects to close between 300 and 400 more restaurants, CEO Joshua Kobza said during a call with investors.
Usually, it closes a couple hundred annually, he said.
“There will always be a minority (of franchisees) who aren’t dedicated, enthusiastic operators,” Chairman Patrick Doyle said on the call.
“We’ll work with them to leave the system.”
The brand’s $400 million “Reclaim the Flame” turnaround plan – to reverse its loss of market share, revive run-down restaurants, streamline overly complicated menus and operations, and draw more young customers – may be starting to work as Burger King’s US comparable sales rose 8.7%.
Despite the Burger King closures, Restaurant Brands International beat Wall Street estimates for first-quarter revenue and profit on Tuesday, boosted by higher traffic and prices at Tim Hortons restaurants in Canada.
The company’s global comparable sales rose nearly 10% in the March quarter, versus analysts’ estimates of 6.5% according to Refinitiv IBES data.
Tim Hortons Canada sales grew 16% and Burger King International’s were 12% higher.
Shares were up 0.6% just before noon Eastern time on Friday.
Big restaurant chains have posted strong sales in the first quarter despite rising concerns about consumer spending power this year amid stubbornly high inflation.
McDonald’s Corp and Chipotle also topped quarterly sales and profit expectations as they pushed new menu items and raised prices over the past year to protect margins from a jump in raw materials and labor costs.
While Burger King has been adding restaurants and growing comparable sales internationally, in the United States it has struggled with bankruptcies by two big franchisees.