Burger King Is Being Crushed By The Retail Apocalypse As Stores Continue To Disappear

Burger King may be one of the most famous fast food chains in the world but not even its Global popularity in vast door count have protected it from facing some alarming Financial issues in the past few years in the United States more Burger King restaurants continue to Disappear With closings in July hitting the highest level since January when 124 locations were shuttered in only 26 days while its main competitors reveal expansion plans and Report profit growth the financial situation of the royal Burger chain can only be described as a train wreck the company is failing to attract new customers catch up with its Rivals and dig itself out of the hole it has fallen into during the pandemic at this point everyone in the industry is asking where did Burger King go wrong luckily for us newly reported data show exactly exactly why the fast food giant is facing one of the worst losing streaks since its foundation in 1954 and that's precisely what we're going to expose today but before moving on we ask you to support our work with a thumbs up on this video and don't forget to subscribe so you don't miss what's coming next Burger King has been flame grilling burgers for almost seven years and over the decades it's rather creepy King mascot Whopper burger and golden fries became well-known worldwide with over 18 000 locations globally and nearly 7 000 in the U.S the brand has managed to carve out a comfortable Niche for itself and it remains in a top position in the market however from the start the Royal Burger chain has never really worn the crown since the early 1960s McDonald's has been the Supreme king of fast food only after two decades of steady growth the burger giant finally Rose to the second spot but it hasn't been able to hold that position in the past couple of years even though most of its playful media stunts Target McDonald's as its main rival evidence revealed in recent years indicates that Burger King will likely never surpass the golden arches from a financial perspective the Burger King restaurant business has been anything but sizzling in 2020 when Americans were under stay at home mandates demand for fast food delivery soar and you may guess who wasn't prepared for it while many other restaurants reap the benefits of experiencing high demand for their delivery services the pandemic exposed that Burger King operations were quite Obsolete and that the company was really falling behind the other growing chains such as Chipotle and Shake Shack which reported record sales growth during that period while Burger King was thrown for a loop today the king's biggest competitor is no longer a clown named as a farmer but a girl with a pair of red Braids by early 2021 Burger King had lost its spot as the second largest Burger chain in America to Wendy's one of the biggest evidences of Burger King's troubles at the time was the fact that when it happened Wendy's had only 6 000 restaurants in the U.S compared to 7500 Burger King locations as analysts noted in a report published by the retail Trends website mash.com for Wendy's that must have felt like an underdog Victory on the flip side for Burger King it was a frustratingly familiar defeat Wendy's had previously snow match the number two position from the Whopper purveyor in 2013 and held on to it for two years Burger King had to fight the scrappy battle to regain its second place spot on the earningsport by incorporating more menu items and introducing enticing Deals they wrote unfortunately its recent dethronement suggests that these strategies have not led to an effective solution as other fast food chains started to get back to pre-pandemic levels Burger King sales and traffic fell steeply as its Financial results continue to disappoint over the past two years sales at Wendy's have jumped 18 while McDonald's have seen sales grow by 25 in contrast at Burger King sales have gone up by Amiga eight percent during a second quarter earnings call Josh Cobbs CEO of the chains parent company restaurant Brands International said that one of the reasons why Burger King is still struggling comes down to new guest visits cops are revealed that foot traffic in the first two quarters of 2023 was negative most of the earnings growth experienced by the company was fueled by higher menu prices not by new customers meanwhile retail experts point to its ongoing woes with the health and profitability of its franchisees as the biggest issue facing Burger King in a single year the four biggest fast food operators in America including Tom's King Holdings and Meridian restaurants unlimited whose portfolio was mainly composed of Burger King stores have filed for bankruptcy citing declines in foot traffic and revenue as well as systemic profitability issues after the traumatic losses Burger King have announced plans to improve the health of franchises and announce the largest wave of restaurant closings since its foundation in 1954. from January the second the January 28 124 locations were shuttered across the U.S a few dozen stores were also closed in February March and April and on May 15th it revealed plans to close an additional 400 stores by the end of 2023 after shattering 53 locations in June 133 restaurants closed doors for good in July the highest number in seven months so far the burger chain has permanently halted operations in 450 locations 50 more than its initial Target in May there was 7 300 Burger King locations in America today there are only 6850 executive sent up the shuttered restaurants were mostly low volume units and the closings were necessary to improve the overall health of the system the company may say that these closures come from a place of corporate strength and business Acumen it's difficult to see them as anything other than proof of financial strain on the other hand the current number two chain Wendy's plans to have between 7 600 and 7 800 by 2025 according to Motley Fool on top of purging some struggling restaurants Burger King was also trying to work with other franchisees to drive better results and encourage those that can't meet brand standards to sell their locations to bed of Performing operators I do expect a bit more noise as we transition some portfolios into the hands of top local operators but think we're moving in the right direction to improve our foundation for the long term cops has said but anti-franchisee policies may actually aggravate its problems even further operators can file a multi-billion dollar lawsuit against the company for breaking the terms of its leases ultimately hurting its bottom line but it seems like executives are willing to face the consequences Burger King's latest financial report detailed that much of the sales growth in the U.S was driven by people spending more when they actually bought food from one of its restaurants not because more people were coming through the door fewer Burger King customers came in over the past three months compared to last year noted cancer we are still not in positive territory he said growth in traffic is one of the most significant near-term opportunities we see for the brand the vast majority of restaurants have been forced to increase prices to compensate for higher inflation but Burger King has taken price increases to a whole other level in a survey conducted by money geek of 145 chains in 50 cities the price for a burger fries and a soft drink Rose nine percent on average in the past year Five Guys Wendy's and Jack in the Box worth the most expensive but Burger King had the sharpest price rise from 2022 to 2023 the price for a meal at the chain Rose 21 from 6.00 76 to 8.18 though a couple of dollars may not seem like a lot it makes a huge difference for Burger King in addition to its price hikes the chain also stopped selling Whoppers at discounted prices and turned to shrinkflation by reducing its portion of chicken nuggets from 10 to 8 by brazing prices 12 percent higher than other chains on average Burger King unveiled that it was suffering beyond the industry-wide woes caused by inflation and labor shortages a few months ago its parent company restaurant Brands International made a strategic hire that laid bare exactly how nervous Executives and shareholders were about its economic prospects Patrick Doyle was formerly the CEO of Domino's and he is commended by the Chain's drastic turnaround when he assumed the position in 2010 the eats a chain and become an afterthought to Pizza Hut and it was receiving tons of negative consumer reviews one of the most significant changes he introduced at Domino's was embracing and streamlining online transactions a couple of years after his departure more than half of the chain sales came from digital orders by comparison online transactions of the chains operated by restaurant Brands International including Burger King Popeyes and Firehouse Subs generated only about one-third of sales according to CNBC the fact that the company called Doyle in to play so late in the game signaled that the parent company was looking for a strong Chief to radically improve and turn the company around before conditions got any worse Doyle announced plans to put the heat back into the brand with a 400 million dollar initiative called reclaim the flame Burger King is gonna spend a hundred and fifty million dollars in advertising and digital Investments and 250 million dollars in a Royal reset involving new restaurant technology new equipment and new infrastructure in other words executives are admitting that the chain is in desperate need of restructuring on every front from its products to its brick and mortar locations hopefully this initiative will show satisfactory results soon because up until this point in 2023 Burger King is just getting burned what do you think we look forward to reading your comments and thank you for watching

Channel: Epic Economist

Views: 29,858

Keywords: burger king closings, burger king restaurant shutdowns, burger king bankruptcy, burger king financial losses, burger king sales drop, burger king foot traffic, burger king franchisee out of business, burger king financial problems, burger king stock, burger king price hikes, burger king price increases 2023, burger king menu changes, food inflation, consumer demand, consumer trends, burger king vs mcdonalds, retail crisis, restaurant closings

Id: ttXVg3BnDnA

Length: 12min 38sec (758 seconds)

Published: Thu Aug 10 2023