Dive Brief:
- Burger King’s U.S. system is more than halfway modernized after the brand completed 370 remodels in 2024, passing the 51% mark for its reimage/remodel program, Restaurant Brands CEO Josh Kobza said on the chain’s Wednesday earnings call.
- Kobza said the chain’s combined marketing and remodeling effort, Reclaim the Flame, which was announced in late 2022, is driving sales lifts at remodeled restaurants.
- The chain has about 80 units of its most advanced store model, the Sizzle concept, in operation, with these stores driving particularly impressive sales results, Kobza said. The brand remains on track to have 85% of its system in a modern image by 2028.
Dive Insight:
Burger King’s U.S. comparable sales increased 1.5% in Q4 2024, Kobza said. By contrast its largest competitor, McDonald’s, saw comps fall 1.4% in the quarter. The Golden Arches’ sales performance was hindered by an E. coli outbreak in Q4.
Burger King’s quarterly results represent a significant competitive turnaround for the chain, which struggled with franchisee bankruptcies and an aging restaurant system coming out of the pandemic. In 2023, it had even projected 400 closures in one year.
The remodels continue to contribute to improvements to the brand’s overall sales. About 220 of its remodels have been open for over six months and are delivering “an average of mid-teens year one sales uplifts” and “even stronger improvements in franchisee profitability,” Kobza said.
The chain has also worked to shore up its franchisee base. RBI pushed to reorient the operating system from sprawling franchisees with a hundred or more stores to smaller, geographically coherent multi-unit operators. Burger King acquired its largest franchisee, Carrols Restaurant Group, for $1 billion last year, with an eye toward remodeling and then breaking up Carrols’ enormous 1,022-unit system. Kobza said that RBI is advancing with that process quicker than expected.
“We've initiated work to begin refranchising select locations in 2025, two years ahead of our original plan, and expect to accelerate refranchising efforts in 2026 and beyond,” Kobza said.
Burger King’s highest tier of restaurant operators saw four-wall EBITDA hit $275,000 last year, Kobza said, while its franchisees overall are seeing $205,000 in restaurant-level profits, according to RBI’s latest earnings release. Comparatively, franchisee four-wall EBITDA was $140,000 in 2022.
Some of that long-term improvement has been due to the transfer of units from struggling operators to more successful, engaged franchisees. Kobza cited a pair of franchisees who acquired 20 underperforming stores in North Carolina in 2021 and began modernizing the restaurants and improving training.
“They delivered an over 30% increase in average restaurant sales and more than doubled their restaurant's four-wall EBITDA to an impressive $325,000 per store on average,” Kobza said.
