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Diving certificate:
- Burger King’s transformation program has resulted in mid-teens sales increases in 150 stores that have undergone the Royal Reset and have been open for at least six months afterward, said Joshua Kobza, CEO of Restaurant Brands International, at the Conference Call on Q2 2024 Results.
- The brand is on track to complete about 400 redesigns in 2024, and about 85 to 90 percent of its U.S. stores will have a modern image by the end of 2028, Kobza said.
- The significance of this increase in sales could prove important for Burger King, which reported a modest 0.1% year-over-year decline in comparable sales in the second quarter. according to an earnings announcement.
Diving insight:
When the RBI announced the Royal Reset Program in 2022The company said previous remodeling programs had resulted in an average 12% increase in sales in the first year at remodeled stores. The Royal Reset’s early results slightly exceed those numbers. This may be because the program focuses on restaurants that offer a high return on investment during remodels, rather than stores at the end of their franchise agreements.
Earlier this year, the chain announced an expansion of the Royal Reset destination and a new design. the Sizzle Store imageKobza said some Sizzle locations have already opened and the response from customers has been positive.
“As we move to offering more of these this year and especially next year, I think this will really change the image of the Burger King brand in the U.S. and help modernize it,” Kobza said.
At the beginning of the year, RBI acquired Burger King’s largest US franchiseeCarrols Restaurant Group, for $1 billion with the intention of significantly accelerating the pace of transformations in the franchisee’s store base. According to the company’s earnings call, 600 former Carrols Burger Kings will be transformed by 2028. According to the earnings release, RBI will eventually re-license the majority of these stores.
The significant increase in sales from the Royal Reset could help Burger King and its operators weather the ongoing QSR traffic storm. The brand’s slow recovery from COVID and overall weakening consumer sentiment have forced several of its franchisees early victims the ongoing series of restaurant bankruptcies.
Kobza said Burger King outperformed the U.S. burger QSR segment last quarter despite the decline in comparable sales. McDonald’s comparable sales In the US, sales fell by 0.7 percent, while sales of Jack in the Box fell by 2.2%Burger King came before McDonald’s in the Value Competition 2024which might have helped him compared to the Golden Arches.