Why Is Burger King Closing Up to 400 Stores This Year?
Burger King, the popular fast-food chain famous for its Whopper sandwich, has announced that it would close from up to 400 of its stores in 2023.
Multiple news outlets have reported that the burger chain, which is part of the restaurant group Restaurant Brands International (RBI), will shutter from 300 to 400 underperforming stores this year. (RBI also owns Tim Horton's and Popeye's).
In the first quarter of 2023, 124 Burger King stores have already closed in the U.S., which has brought its total store count to 6,964 in its home country. According to a report by Today.com, several large Burger King franchisees have filed for bankruptcy: Illinois-based Toms King, Michigan-based EYM King, and Utah-based Meridian Restaurants Unlimited.
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During its first quarter earnings call, Burger King CEO Joshua Kobza said it historically closes “a couple hundred” stores each year. But the 400 it plans to close this year is a record high.
The reason for the closures boils down to performance. Simply put, the company intends to focus on stores with stronger finances and will shutter those that are the least profitable.
“There will always be a minority [of franchisees] who aren't dedicated, enthusiastic operators. We'll work with them to leave the system and move on to do something else,” news sites quoted company chairman Patrick Doyle. “There simply is no room for franchisees who are not willing or able to work hard to operate restaurants that are better than the system average over the long term.”
Despite the closures, Burger King remains one of the world’s largest and most valuable fast-food chains. Founded in 1954 in Jacksonville, Florida, Burger King now has over 18,700 restaurants globally, most of which are owned and operated by franchisees. For years it was second only to McDonald’s, but it slipped to third place in 2020 after it was overtaken by Wendy’s.
In the first quarter of 2023, Burger King’s systemwide sales grew 14.3 percent to $6.241 billion compared to $5.647 billion in the same period last year.
Burger King in the Philippines
In the Philippines, the Burger King franchisee is Jollibee Foods Corp, which, of course owns the country’s largest fast-food chain (Jollibee) as well as several other restaurants brands like Mang Inasal, Red Ribbon, Greenwich, and Chowking. In 2011, JFC acquired a 54 percent equity interest in BKTitans, which is the parent company of the entities that owns the franchises for Burger King stores.
As of the end of 2022, there were 125 Burger King stores in the Philippines, all of which are owned and operated by JFC, up from just 99 in September 2021.
There has been no word from JFC whether it intends to close any of its Burger King stores, following the announcement of its parent company in the U.S. On the contrary, two more branches opened in the country this year, which brings the total number of local Burger King stores to 27 as of the end of March 2023.
