Several different buyers are acquiring Burger King restaurants out of bankruptcy after winning an auction for the assets of large franchisee Meridian Restaurants Unlimited earlier this month.
But the biggest buyer is, apparently, Burger King itself.
Seventy of the 91 restaurants still operated by Meridian were sold in a 10-hour auction held earlier this month, according to court documents, for a total of about $17.5 million.
Four franchisees, mostly existing Burger King franchisees, are buying restaurants in specific states. But Burger King was the largest individual buyer, agreeing to pay $4.4 million for 29 restaurants in Utah and Montana.
KRAF Inc., an Arizona Burger King franchisee that had provided the initial “stalking horse” bid for the restaurants out of bankruptcy, is paying $7 million for seven locations in that state, though $1.5 million of that is reserved for construction to repair hurricane damage on one of the locations.
Kansas King is acquiring 16 locations in Nebraska and Kansas for $2.2 million, a deal that includes $1.5 million in “support funding” from Burger King itself.
Dakota Restaurant Partners is acquiring a dozen locations in North and South Dakota, Minnesota and Montana for $3.4 million. Snake River Foods, a Burger King operator out of Idaho, is buying three Montana units for just over $600,000.
A bankruptcy court was set to approve the deals this week.
It is unclear as of yet what will happen to the restaurants that are not sold but there are some local reports of closed locations in the aftermath of the auction. It also suggests that only just more than half of the 120 restaurants Meridian did operate before it filed for bankruptcy in March will survive the process still open.
Burger King struggled coming out of the pandemic, as perpetually lower-than-average unit volumes proved problematic as costs surged in late 2021 and 2022 and the chain’s sales did not grow like those of rivals McDonald’s, Wendy’s and Taco Bell. The brand closed about 60 locations last year and more have closed so far this year amid bankruptcy filings and other closures.
Meridian was one of two major Burger King operators to file for bankruptcy earlier this year when it filed in March. It closed restaurants entering the filing and closed several others after seeking debt protection. And, though the company said its sales and profits were coming back, Burger King itself demanded a sale, arguing that the operator was spread too far and wasn’t a strong enough operator to warrant continuing in the system.
Meridian’s restaurants are in several states, from Minnesota to Utah. Burger King is pushing to focus on smaller operators with 50 or fewer locations, and not so far apart. “In an ideal world, I’d like it if they could drive to all their restaurants,” Josh Kobza, CEO of Burger King parent company Restaurant Brands International, said in May.
Burger King has shown some improvement of late, however, as sales have improved and franchisees have worked on operations. The other operator that filed for bankruptcy this year, Toms King, sold for $33 million in April to multiple buyers.
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