Burger King To Make $400M Investment In Renovations, Ads

Words by Retail Bum

Burger King To Make $400M Investment In Renovations, Ads
Burger King To Make $400M Investment In Renovations, Ads

Quick service restaurant (QSR) chain Burger King is planning to spend $400 million renovating its stores and advertising as part of its push to revive its business in the U.S. market.

The investment plans, revealed at the company’s annual franchisee convention in Las Vegas, will weigh down adjusted earnings per share by 10 to 12 cents annually. But, by 2025, Burger King expects its investments to start paying off.

The company’s decision to make the investment follows its lackluster performance over the past year. In the last quarter, the company’s sales remained flat and trailed that of McDonald’s and Wendy’s.

“We might see remodels start to hit the market mid-2023 and going forward. It should really be a gradual ramp of the business over the course of a couple of years,” Restaurant Brands CEO Jose Cil said.

Outside the U.S. market, Cil has been focusing efforts on boosting demand at Tim Hortons stores in Canada, which is Burger King’s sister chain.

The company’s investment plan allocated $200 million toward the remodeling of 800 store locations. Meanwhile, another $50 million will be spent on upgrading technology, kitchen equipment, and other store enhancements at 3,000 locations. Overall, the company operates more than 7,000 locations in the U.S., CNBC reported.

According to Burger King’s historical data, remodeled restaurants yield a 12% improvement in sales in the first year and outperform older stores in the long run.

“We might see remodels start to hit the market mid-2023 and going forward. It should really be a gradual ramp of the business over the course of a couple of years,” Cil added.

On the marketing front, the company plans to invest more in ads starting in the fourth quarter. It has set aside $120 million for ad spending over the next two years, marking a 30% increase.

Aside from advertising and store improvements, Burger King plans to spend an additional $30 million over the next two years on improving its mobile app, which will be more than the fees it will receive from its franchisees for accessing the technology.

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