The leadership team at Restaurant Brands International (RBI) promised to focus on making their franchisees more profitable. This pledge came soon after they took charge early last year.
The decision followed a series of bankruptcies and shutdowns, especially in their main brand, Burger King.
Burger King's Strategic Shift Targets Youth
The fast-food chain operator is changing its strategy at Burger King in the United States. They are shifting focus from large to local franchisees to attract younger customers.
Carrols, which runs over 1,000 Burger King and 60 Popeyes locations, is partly controlled by the owner of Tim Hortons, holding about 15% of the company.
Tom Curtis, the president of Burger King U.S. and Canada, explained in a conference call, 'This is our chance to change how Burger King is seen in the U.S. and actively move towards a more united group of operators.'
The company plans to spend around $500 million to update 600 restaurants they will take over from Carrols. They aim to remodel these outlets at more than twice the current speed.
Restaurant Brands' leaders also mentioned their goal to increase the number of Burger King U.S. franchisees. They plan to raise the count from around 300 to 400-500 in five years.
The company will offer $9.55 per share in cash for Carrols shares they don't already own. This price is 13.4% higher than the stock's closing value on January 12. Carrols' shares were trading at $9.48, while Restaurant Brands saw a slight decrease of about 1%.
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Burger King Revamps with $400 Million Strategy
In September 2022, Burger King introduced its ambitious "$400 million Reclaim the Flame" makeover plan. This strategy includes investing in restaurant renovations, relocations, enhanced marketing, and digital improvements.
Unlike previous campaigns highlighting its iconic Whopper, the new marketing efforts will emphasize the unique flame-grilled taste of its burgers.
Burger King has always stood out for its distinctive smoky flavor, achieved by flame-broiling the patties. This unique taste contributed to a 7.6% increase in international sales and a 6.6% rise in U.S. sales in the third quarter of 2023.
Despite these gains, Burger King is still trailing behind competitors McDonald's and Wendy's in store growth. The redesigned stores will focus on accommodating mobile orders and overall efficiency. Burger King is experimenting with in-store kiosks and has committed $30 million to enhance its mobile app.
Additionally, the company is planning to increase wages and prices.
2024 kicked off with Burger King's latest menu innovations. January saw the launch of the Candied Bacon Whopper, and the Fiery Big Fish sandwich with spicy Alaskan Pollack was introduced soon after. In the UK, the Ultimate Bean Burger, a vegan option, was added in February.
RBI announced on Tuesday that the early results of their strategies are showing success. Last year, profits surged across all four brands in their respective home markets, with Burger King in the U.S. leading the charge.
In 2023, a standard Burger King outlet saw profits of $205,000, according to RBI. This marks a significant 46% increase from 2022, where the average profit per location was around $140,000.
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