Burger King will spend $400 million over two years on modernization

Over the next two years, Burger King plans to spend more than $400 million on advertising, restaurant renovations, and support for technological and digital improvements.

The chain’s owner, Restaurant Brands International, provided information on its “Reclaim the Flame” plan, which aims to boost franchisee profitability and accelerate sales growth, in a press release on Friday.

More than 93% of US restaurants support it, and it was created in partnership with national leaders.

The investment aims to upgrade the portfolio of Burger King restaurants, enhance customer satisfaction, and increase brand awareness.

The flame-grilled Whopper will maintain its elevated position, according to Burger King, which also plans to launch the Royal Crispy Chicken sandwich and expand its lineup of chicken sandwiches.

It stated that it will continue to offer “a strong everyday value offering in its menu” despite the challenges that inflation is continuing to put on the cost of meals at home.

In order to “Fuel the Flame,” $150 million will be spent on marketing and digital initiatives, and $250 million will be used for a “Royal Reset” that includes upgrades to buildings, high-quality remodels, relocations, and high-tech kitchen and restaurant equipment.

In order to sustain the Burger King app, Burger King will spend an additional $30 million until the year 2024.

For the “Royal Reset,” a restaurant refresh programme for over 3,000 sites will cost $50 million, along with an equivalent co-investment from franchisees.

Additionally, $200 million would be used to remodel about 800 restaurants.

It is intended to increase capital returns and alter the company’s incentive structure by offering more significant base incentives, access to extra contributions, and funding in the form of upfront cash upon completion of the redesign.

Contributions from the remodel programme will be recorded as royalty credits on the company’s income statement for up to 20 years, or the duration of the new franchise agreements.

Burger King stated that it did not anticipate the programme to have a materially negative impact on the income statement and that, if it is successful in producing sales increases that are on par with or better than historical experience, it is anticipated that the programme will generate a positive return on capital and be accretive over time.

In 2025 and beyond, Burger King is expected to resume more routine capital commitments, the firm said. “We believe this new approach over the next two years will provide the momentum needed to move into a sustainable reimaging initiative,” it added.

The initiatives, according to Tom Curtis, president of Burger King North America, are aimed at giving customers a “superior experience.”

In a statement, Curtis said, “I’m very proud and thankful that our franchisees have stepped up once again to invest in our performance together, reflecting the genuine partnership and mutual respect we have built between the franchisor and franchisees.”

“Ultimately, the success of this ‘Reclaim the Flame’ plan comes down to execution at the restaurant level, and we are so fortunate to have franchisees who love this brand and are working closely with us to focus on the right priorities. I believe in this team, this plan and a bright future as we evolve and enhance our guest experience and drive profitable growth for the business.”