Burger King has estimated that the fast food giant will have to close up to 400 locations across the US this year.
The popular burger chain said underperforming stores would be the first to go.
After announcing the company’s first-quarter results, CEO Joshua Copza said the chain expects to close between 300 and 400 locations in 2023.
That’s a historic high, Kobza said — the company typically closes a few hundred stores a year.
According to its earnings release, Burger King eliminated 124 locations in the year to March, leaving 6,964 restaurants.
Not all of the 300 to 400 sites that have closed down this year have been disclosed, with Chief Kobza acknowledging there is a “reasonable degree of uncertainty” about the plans.
Sales performance can vary widely between Burger King locations, and the company said it is seeking an additional franchise with stronger financing this year.
‘There will always be a minority (of franchisees) who are not dedicated and passionate operators,’ said Chairman Patrick Doyle. We will work with them to leave the system and move on to do something else.
“There is simply no place for franchisees who are unwilling or unable to work hard to operate better-than-average system restaurants over the long term.”
It comes after two Burger King franchise owners declared bankruptcy earlier this year.
For decades, the Whopper house had to live in the shadow of the golden arches of McDonald’s as the second largest burger chain in America. In 2020, it lost second place to Wendy’s.
Last month, an analyst said the chain was at risk of entering a “death spiral” if it failed to catch up with its competitors.
Meridian Restaurants Unlimited filed for bankruptcy in March, struggling with rising food costs and poor sales at the more than 100 locations it operates.
It will close 27 locations in seven states including Minnesota, Montana and Utah, after running up $14 million in debt.
The franchisor said it was “possible, if not likely” that he would be pressured to close more stores while he negotiates rent and operational improvements with the landlords.
Another franchisee, EYM King of Michigan, also announced it would close 26 restaurants across the state in March after the chain missed a deal with the Labor Department.
The fast food giant has announced that it will lay off 424 employees as it prepares to close restaurants through April.
In a letter to the state Department of Labor and Economic Opportunity, EYM King of Michigan LLC said it failed to reach an agreement with Burger King Corp.
The 90-unit Toms King operator filed for Chapter 11 bankruptcy protection in January and had to be sold for $33 million.
Other distressed sites are expected to be purchased. According to Restaurant Business, the 37 Virginia stores are expected to be acquired for $22 million by DC Burger.
Meanwhile, the Carali group is set to pay more than $7 million for 27 locations in Ohio and Pittsburgh, Pennsylvania.
In its first-quarter results, the company reported that despite store closures, its comparable sales were up 8.7 percent.
The brand is hoping their $400 million “Reclaim the Flame” turnaround plan will start working.
The plan, launched in September 2022, aims to accelerate sales growth, increase franchise profitability, revive run-down restaurants, and streamline overly complex menus and operations.