facebook pixal
Financing

Burger King is investing $400M to revitalize its U.S. business

The burger chain will spend the money over two years to boost marketing and invest in technology and remodels. It has the support of most of its franchisees.
Burger King revitalization plan
Burger King is investing $400 million to improve marketing, technology and remodels in its U.S. locations. / Photograph: Shutterstock.

Burger King on Friday said it would invest $400 million in marketing, remodels and upgraded technology over the next two years, part of a broad-scale effort to revitalize its U.S. business called “Reclaim the Flame.”

The Miami-based burger chain, which has fallen behind its top competitors in recent years, said it would invest $150 million in advertising and digital investments.

The company is also planning to invest $250 million in restaurant technology, kitchen equipment, building enhancements, remodels and relocations.

Those investments will come along with franchisee efforts to remodel the chain’s restaurants and are designed to improve the guest experience and get people back into its restaurants. Burger King said franchisees representing 93% of its 7,000 U.S. locations have endorsed the plan, presented during the company’s annual franchise convention last week.

“It’s not just a marketing plan,” Tom Curtis, president of Burger King North America, said in an interview. “It’s a marketing plan with support around operations and restaurant image. We’ve hit on all pillars of what it takes to run great restaurants.”

Burger King exterior

Burger King's plan will encourage operators to remodel units. / Photo courtesy of Burger King.

(Read about Burger King's sales challenges here.)

Burger King has been working to develop its plan in recent months after the company’s sales fell behind those of rivals McDonald’s and Wendy’s—the latter of which surpassed Burger King as the country’s second-largest burger chain two years ago. Burger King has been among the slowest major quick-service chains to recover from the pandemic.

Those challenges were accentuated by the failure of the chain’s upgraded chicken sandwich last year, called the Ch’King, which didn’t generate the sales lift the company expected—even as rivals McDonald’s and KFC both enjoyed strong years based on their chicken sandwiches.

The company overhauled much of its executive team, elevating Curtis into the president’s role. Curtis came to the chain last year from Domino’s, where he specialized in operations.

Burger King’s “Reclaim the Flame” plan is a broad-based strategy to improve the company’s brand positioning, menu and operations. The strategy is similar to what Burger King sister chain Tim Hortons accomplished in Canada, featuring an overhauled executive team followed by corporate investment in marketing along with operational improvements, remodels and technology.

Those efforts have helped improve that chain’s sales in its home market. “It’s a similar blueprint to what we’ve done at Tim Hortons in Canada,” Jose Cil, CEO of Burger King parent Restaurant Brands International, said in an interview. “We built a good team and we’ve invested behind the plan in our ad fund.”

(Read about Tim Hortons’ comeback here.)

The company will add $120 million to its U.S. ad fund, which will increase advertising spending by 30% per year. Franchisees have also agreed to increase their ad fund contribution by 50 basis points through 2028, so long as they meet certain profitability thresholds. Burger King will spend another $30 million through 2024 to support the company’s mobile app, loyalty program and improve delivery and pickup options.

The $250 million will include $50 million that will come alongside co-investment from franchisees to refresh some 3,000 restaurants and add technology and equipment and make building improvements.

Burger King interior

Burger King's interior remodel. / Photo courtesy of Burger King.

The “Royal Reset” remodel program also provides $200 million in funding for 800 remodels over the next two years.

The company is changing its incentive structure to encourage operators to remodel, shifting away from traditional discounts on ad fund and royalty contributions to what Burger King says are more “substantial baseline incentives,” including upfront cash as remodels are completed. Operators can also get additional contributions from the company in exchange for a higher royalty rate.

The program also provides greater support for better operators, which the company says will provide an incentive for franchisees to improve operations. Burger King says the program “represents a shift toward higher-quality remodels and creates a viable path toward modernizing the system.”

Burger King says its traditional remodels generate a 12% sales lift in its first year coupled with sustained outperformance of about 2% compared with non-remodeled restaurants. The company, however, said it is focused on “enhancing these results” over the next two years, which it believes will result in a more sustainable reimaging program over time.

As for the menu, Burger King says it plans to focus on its premium Whopper and flavor extensions. It is also planning more chicken sandwiches—the chain is replacing its Ch’King with the Royal Crispy Chicken, which is easier to make and comes with more unique flavor combinations.

The company also said it is developing other products such as burgers, breakfast, beverages, snacks and plant-based items. It is also working on providing “strong everyday value.”

“What gave us confidence, gave me confidence, to make a historic investment in the Burger King system in the U.S. is the quality of team and leadership and the level of engagement from franchisees,” Cil said. “This is not a plan that we made in a lab in Miami. This team has been on the road a long time.”

UPDATE: This story has been updated to add new information.

Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.

Trending

More from our partners