Dive Brief:
- Burger King’s remodeling program has driven sales “uplifts in the mid-teens range” at 150 stores that have undergone the Royal Reset and have been open for at least six months afterwards, Restaurant Brands International CEO Joshua Kobza said on the company’s Q2 2024 earnings call.
- The brand is on track to complete about 400 remodels in 2024, and about 85% to 90% of its U.S. stores will have a modern image by the end of 2028, Kobza said.
- The significance of that sales lift could prove important for Burger King, which saw a modest 0.1% year-over-year decline in comparable sales in Q2, according to an earnings release.
Dive Insight:
When RBI announced the Royal Reset program in 2022, the company said that previous remodel programs had produced a 12% sales lift on average at remodeled stores in the first year. Initial results from the Royal Reset are pacing slightly ahead of that. This may be a result of the program’s focus on restaurants that offered a high return on investment for remodels, rather than units at the end of their franchising contracts.
Earlier this year, the chain announced an expansion of the Royal Reset goal and a new design, the Sizzle store image. Kobza said a few Sizzle locations have already opened, with positive customer response.
“As we transition to doing more of those this year and especially into next year, I think it is really going to transform the image of the Burger King brand in the US, and help to modernize it,” Kobza said.
RBI earlier this year acquired Burger King’s largest U.S. franchisee, Carrols Restaurant Group, for $1 billion with the intent to greatly accelerate the pace of remodels in the franchisee’s store base. According to the company’s earnings call, it will remodel 600 former Carrols Burger Kings by 2028. RBI will eventually refranchise the majority of those stores, according to its earnings release.
The significant sales lift delivered by the Royal Reset could help Burger King and its operators weather the ongoing QSR traffic storm. The brand’s slow recovery from COVID, and weakening consumer sentiment overall, made several of its franchisees early victims of the ongoing run of restaurant bankruptcies.
Kobza said that Burger King outperformed the U.S. burger QSR segment in the last quarter, despite its drop in comparable sales. McDonald’s comparable sales fell 0.7% in the U.S., while Jack in the Box’s sales fell 2.2%. Burger King did beat McDonald’s to the punch in the 2024 value competition, which may have helped it relative to the Golden Arches.
