The Burger King logo is displayed at a Burger King fast food restaurant on January 17, 2024 in Burbank, California.
Mario Tama | Getty Images
Burger King will invest another $300 million to renovate about 1,100 of its U.S. restaurants as part of a broader turnaround, the chain's parent company said Tuesday.
Owner Restaurant brands International launched Burger King's comeback strategy a year and a half ago with $250 million to renovate restaurants and upgrade technology and equipment, plus another $150 million to invest in its mobile app and advertising.
In January, the parent company bought Burger King's largest U.S. franchisee, Carrols Restaurant Group, for $1 billion to speed up the rebuilding process. The company estimates it will spend an additional $500 million to modernize 600 Carrols locations.
Including the investment announced Tuesday, Restaurant Brands plans to spend about $2.2 billion to revive the chain's U.S. operations. The company expects that 85% to 90% of its approximately 7,000 U.S. restaurants will feature the same modern design by 2028.
“It was the first time in a long time that RBI had invested a significant amount of capital back into the company to invest alongside franchisees,” Burger King U.S. President Tom Curtis told CNBC. “I think the process was, 'Let's see how this works'… and we're seeing the first results in remodels.”
To date, approximately 100 Burger King locations have been renovated and updated. According to Curtis, these locations have seen sales increase following the facelift.
The latest round of renovations will follow Burger King's new “Sizzle” design, including drive-thru pickup for mobile orders and self-order kiosks. These new features are expected to encourage customers to order even more Whoppers and fries.
Yet Burger King has had to put in its own money to encourage franchisees to renovate. Renovations can be costly – especially with high interest rates – and often require locations to be temporarily closed.
Similar to Restaurant Brands' first round of investment, Burger King franchisees who choose to remodel their locations will receive cash once construction is complete. Burger King lets operators choose how much of a cut they get on the royalties they pay to the company.
Starting Tuesday, Curtis will be on a roadshow across the U.S. to pitch the remodel strategy to franchisees and begin the application process for the $300 million investment.
Shares of Restaurant Brands were flat in premarket trading Tuesday after the company reported weaker-than-expected earnings, but quarterly revenue beat Wall Street estimates. Burger King's same-store sales grew 3.8% in the first quarter, lagging StreetAccount estimates of 4.1%.