Restaurant Brands International Inc. plans to expand its Burger King remodeling program with an additional $300 million from 2025 to 2028, the company said in announcing its first-quarter earnings.
The Toronto-based RBI, which also owns the Tim Hortons, Popeyes Louisiana Kitchen and Firehouse Subs brands, said it plans to remodel 600 Burger King units it will be adding from its announced acquisition of the Carrols Restaurant Group, which it plans to close in the second quarter.
Burger King in September 2022 announced its initial $400 million, two-year Reclaim the Flame investment in modernizing the burger system.
“Reclaim the Flame is working,” said Josh Kobza, CEO of RBI, said in a first-quarter earnings call. “And you're seeing another clear demonstration of that confidence in the expanded company investment we announced this morning.
“The $300 million investment will contribute to remodeling another 1100 restaurants and bring us to between 85% and 90% modern image by 2028,” Kobza said. “We're continuing to incentivize better operations and higher scope remodels while introducing another element to incentivize urgency by providing franchisees more meaningful contributions the sooner they reimage.”
Kobza said the Sizzle remodel platform should be available to all franchisees soon.
Digital-forward remodels have been made in the Miami, Las Vegas, New Jersey, Northern California and Asheville, N.C., markets, he said.
“I do expect that that all of these remodels should be fairly impactful,” Kobza added. “We're doing larger scope remodels in general, compared to what we did over the prior 10 years, so those tend to have a big impact on the consumer and on sales.”
Patrick Doyle, RBI executive chairman, added: “Going to a great looking Burger King but driving past another one that doesn't look great is not ideal. We thought it was important for us to get this last leg out there to show our commitment to the franchisees, to give you visibility on our path to getting this system all looking great.”
Remodels currently are under 50% of the system, he added, but the company awaits the positive impact on the brand overall as more remodels are completed.
The initial 2022 Reclaim the Flame program included $150 million in advertising and digital investments ("Fuel the Flame") and $250 million in remodels and relocations, restaurant technology, kitchen equipment, and building enhancements ("Royal Reset").
During the three months ended March 31, RBI funded $6 million toward the Fuel the Flame investments, including $5 million toward support behind the Burger King U.S. advertising fund, and $19 million toward Royal Reset investments, including $9 million toward remodels.
“The marketing is getting better,” Kobza said. “We have the biggest focus on operational consistency that the brand has ever had. We now have a path to be nearly fully modern image across the U.S. by 2028. Our franchisees are now on a path to strong profitability.”
As of March 31, the company had funded a total of $79 million toward the Fuel the Flame investments and $81 million toward Royal Reset investments.
For the first quarter ended March 31, RBI’s net income was $328 million, or 72 cents a share, compared to $277 million, or 61 cents a share, in the prior-year period. Revenues were $1.739 billion, compared to $1.59 billion in the prior-year quarter.
Same-store sales by concept were up 15.5% at Tim Hortons Canada, up 8.7% at Burger King U.S., up 3.4% at Popeyes US and up 0.3% at Firehouse Subs U.S. International same-store sales were down 3% at Time Hortons, up 12.5% at Burger king, up 29.8% at Popeyes and up 1.1% at Firehouse Subs.
As of March 31, Restaurant Brands International owned and franchised 31,113 restaurants, including 7,139 Burger Kings, 4,505 Tim Hortons, 3,412 Popeyes, 1,277 Firehouse Subs, and 14,780 in its international division.
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