Burger King to pour $400M into advertising, restaurant remodels, app improvements over 2 years
02 August 2022, Hamburg: The logo and Schirifzug "Burger King", taken at the restaurant on Mundsburger Damm during a press event of the fast food chain of the same name. Photo: Georg Wendt/dpa (Photo by Georg Wendt/picture alliance via Getty Images)
Burger King is planning to invest more than $400 million over two years in advertising, restaurant enhancements and remodels and to support tech and digital improvements.
In a press release Friday, the chain's owner, Restaurant Brands International, shared details of a plan it calls "Reclaim the Flame" aimed at accelerating sales growth and driving franchisee profitability.
It was built in collaboration with leaders from across the country and endorsed by more than 93% of restaurants in the U.S.
The investment is intended to modernize the Burger King restaurant portfolio and improve the customer experience, attracting more traffic to the brand.
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Burger King said it would invest in premium branding to "reaffirm the elevated position of its flame-grilled Whopper," in addition to building a chicken sandwich portfolio with the launch of the Royal Crispy Chicken sandwich.
It noted that, as the cost of food at home continues to face pressures from inflation, it will continue to provide "a strong everyday value offering in its menu."
To "Fuel the Flame," $150 million will go toward advertising and digital investments and $250 million is allocated for a "Royal Reset" involving restaurant technology, kitchen equipment, building enhancements and high-quality remodels and relocations.
Through 2024, Burger King will invest $30 million in excess of the digital fees collected from franchisees to support the Burger King app.
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For the "Royal Reset," $50 million as well as a comparable co-investment from franchisees, will go toward a restaurant refresh program for approximately 3,000 locations.
In addition, $200 million will go to remodeling approximately 800 restaurants.
It is designed to improve returns on capital and change the company's incentive structure, providing more substantial base incentives and access to additional contributions, as well as funding in upfront cash at the time of remodel completion.
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Contributions from the remodel program will be accounted for as royalty credits and recognized through its income statement over the life of the new franchise agreements, or for up to 20 years.
Burger King said it did not expect any materially negative impact to the income statement from the program and said that — if it is successful in generating sales uplifts consistent with historical experience or better — it is expected that the program will generate a positive return on capital and be accretive over time.
"We believe this new approach over the next two years will generate the momentum needed to transition into a sustainable reimaging program that reverts to more normalized capital contributions from Burger King in 2025 and beyond," the company said.
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Tom Curtis, president of Burger King North America, said the initiatives are focused on providing a "superior experience" for customers.
"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," Curtis said in a statement.
"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."
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