U.S. Burger King franchisees of Restaurant Brands International Inc. pounced on the company’s “Reclaim the Flame” investments, oversubscribing the “Royal Reset” program by $250 million within weeks, executives said Thursday.
The Toronto-based quick service company, which also owns the Firehouse Subs, Popeyes Louisiana Kitchen and Tim Hortons brands, released its results for the third quarter ended Sept. 30 and updated investors on its Plan to invest US$400 million in Burger King presented in September.
In addition to increased marketing spend for Burger King’s “Have It Your Way” and “You Rule” platforms, the company has pledged to invest $250 million in what it has called the “Royal Reset” for American restaurants, which are operated by about 500 franchisees. , as part of a larger program.
In September, the company pledged to invest $50 million over the next two years in a restaurant renovation program that is expected to affect about 3,000 of the company’s more than 7,000 US units. Another $200 million has been earmarked for a renovation program expected to affect around 800 restaurants over the next two years.
José Cil, CEO of RBI, said the $250 million included a “$50 million capital investment in restaurant technology, kitchen equipment and a building improvement renovation program: and the” Royal Reset renovation program that provides access to $200 million in funding for high-quality, high-yield renovations.
The refresh and renovation program is expected to reach about half of restaurants in the U.S. system, he said.
“We are encouraged by the level of enthusiasm and commitment from franchisees to participate in the $50 million refresh, which includes a dollar-for-dollar matching investment from franchisees,” Cil said. “We opened a two-week application process in mid-October and were oversubscribed before the close.”
Cil said Burger King’s field teams now follow the due diligence process of approving every investment request for kitchen equipment, building upgrades and restaurant technology. He added that the company “prioritizes those who we believe will generate the greatest returns for each restaurant through this program.”
Cil said the company’s $200 million renovation program has also generated strong interest.
“It gives us confidence in our ability to deliver on this program,” he said, and it was “a very encouraging sign, especially given the current macroeconomic pressures facing many players in our industry.”
The program’s incentives included initial capital for franchisees upon completion of the renovation project, rather than royalties or other credits that were historically the norm.
“We are reducing the need for our franchisees to tap into other sources of capital to facilitate their investment,” Cil noted. “That being said, we recognize that many will need to tap into other sources, and we are working with franchisees – those with or without a strong financial footing today – and their lenders to position them well for the future.”
Cil said, “Our top priority with this program is quality over quantity. Our goal is not only to strengthen the health of the system as a whole, but also to create positive momentum for franchisees to invest more in their long-term portfolios. »
Part of the investments will be made in improving digital platforms in Burger King units, Cil added. The company said that in the third quarter, digital sales increased 26% year-over-year to about $3.4 billion, which represents one-third of system-wide sales.
Joshua Kobza, chief operating officer of RBI, said the company has updated its 50 Burger King restaurants in the Miami area with new point-of-sale terminals running on proprietary software as well as new touch monitors. kitchen display, indoor and outdoor menu screens. and upgrading cabling and internet.
“Restaurant teams are thrilled and can trade their time between fixing technology issues and improving the customer experience,” said Kobza, who has improved customer satisfaction scores by around 30% since 2021. improvements can serve as a basis for other restaurants in the system. , he noted.
For the third quarter ended Sept. 30, Restaurant Brands International net income increased to $530 million, or $1.17 per share, from $329 million, or 70 cents per share, in the same period last year. last year. Revenue reached $1.726 billion, compared to $1.495 billion in the year-ago quarter.
The strength of the US dollar impacted results, with RBI saying exchange rates totaled a loss of nearly $30 million.
Worldwide system-wide same-store sales increased 9.1%, with increases of 10.3% at Burger King, 9.8% at Tim Hortons and 3.1% at Popeyes.
As of September 30, Restaurant Brands International had nearly 30,000 restaurants in more than 100 countries, including 19,401 Burger Kings, 5,405 Tim Hortons, 3,928 Popeyes and 1,234 Firehouse Subs.
Contact Ron Ruggless at [email protected]