Burger King plans to invest more than $400 million over two years in advertising, restaurant improvements and remodeling and to support technological and digital improvements.
In a press release Friday, the chain’s owner, Restaurant Brands International, shared details of a plan it calls “Reclaim the Flame” that aims to accelerate sales growth and drive franchisees’ profitability.
It was built in collaboration with leaders from across the country and endorsed by more than 93% of restaurants in the United States
The investment is intended to modernize the Burger King restaurant portfolio and improve the customer experience, attracting more traffic to the brand.
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Burger King said it would invest in premium branding to “confirm the high position of its flame-grilled Whopper,” as well as build a chicken sandwich portfolio with the launch of the Royal Crispy Chicken sandwich.
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It noted that, as the cost of food at home continues to face pressure from inflation, it will continue to provide “a strong everyday value proposition in the menu.”
To “Fuel the Flame,” $150 million will go toward advertising and digital investments, and $250 million is earmarked for a “Royal Reset” involving restaurant technology, kitchen equipment, building improvements, and high-end remodeling and relocations.
Through 2024, Burger King will invest $30 million in excess of the digital fees collected from franchisees to support the Burger King app.
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For “Royal Reset,” $50 million plus a matching co-investment from franchisees will go toward a restaurant renewal program for approximately 3,000 locations.
In addition, 200 million dollars will go to rebuild around 800 restaurants.
It is designed to improve return on capital and change the company’s incentive structure, providing more substantial base incentives and access to additional contributions, as well as upfront cash financing upon completion of the redevelopment.
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Contributions from the redevelopment program will be accounted for as royalty credits and recognized through the income statement over the life of the new franchise agreements, or for up to 20 years.
Burger King said it did not expect any material adverse impact on its income statement from the program and said that – if successful in generating sales increases in line with historical experience or better – the program is expected to generate a positive return on capital and be active over time.
“We believe this new approach over the next two years will generate the momentum needed to transition into a sustainable imaging program that returns to more normalized capital contributions from Burger King in 2025 and beyond,” the company said.
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Tom Curtis, president of Burger King North America, said the initiatives are focused on providing a “superior experience” for customers.
“I am very proud and grateful that our franchisees have stepped up again to invest in our performance together, reflecting the true partnership and mutual respect we have built between franchisor and franchisees,” Curtis said in a statement.
“Ultimately, the success of this ‘Reclaim the Flame’ plan comes down to execution at the restaurant level, and we are fortunate to have franchisees who love this brand and work closely with us to focus on the right priorities. I believe in this team, this plan and a bright future as we develop and improve our guest experience and drive profitable growth for the business.”