Burger King® Announces Additional Investment to Achieve 85%-90% Modern Image in U.S. Restaurants by 2028

$300M new co-investment with Franchisees to deliver modern restaurant image in 85%-90% of U.S. Burger King® restaurants by 2028

MIAMI, April 30, 2024 /PRNewswire/ - Burger King Company LLC ("Burger King", "BK", "Company") today announced an additional $300M investment to accelerate the modernization of Burger King® restaurants across the U.S. This comes after BK announced $250M in modern image, technology and new kitchen equipment ("Royal Reset") in September 2022 as part of its Reclaim the Flame plan, and a further $500M to accelerate the reimaging of more than 600 Carrols Restaurant Group ("Carrols") owned Burger King restaurants following the pending acquisition of Carrols. 

The September 2022 Reclaim the Flame plan also included $150M in incremental digital and media investments through 2024 ("Fuel the Flame") followed by an agreement with franchisees to increase their investments in advertising from 2025-2028 should certain franchisee profitability metrics be achieved.

The Brand's Reclaim the Flame investments have driven strong early results, including record average U.S. Franchisee profitability in 2023, on the path to our publicly stated goal of achieving $300,000 in average EBITDA in our BK US restaurants, as well as strong sales uplifts from the 100 Royal Reset remodels that have been completed and reopened for at least six months.

In January, Burger King announced plans to acquire Carrols, the brand's largest U.S. Franchisee, for an enterprise value of approximately $1B. To further accelerate the brand's turnaround, this was coupled with a plan to remodel approximately 600 of the over 1,000 acquired Burger King restaurants utilizing the operating cash flows of Carrols and bringing the Carrols portfolio to fully modern image by 2028. The Company expects to refranchise substantially all of the Carrols portfolio to smaller, local operators within 3 to 7 years after completion of the acquisition.

The additional $300M investment will launch an expanded co-investment program, "Royal Reset 2.0", which builds on the initial success of the existing Royal Reset modern image investments. The program will provide cash incentives to top performing and committed operators to support quality remodels and rebuilds and unlocks the opportunity to complete approximately 1,100 additional remodels through 2028.

As a result of the Royal Reset programs and planned Carrols remodels, Burger King now has a clear path to achieve 85%-90% modern image by 2028. The brand does not expect to deploy any additional capital towards co-investment remodel programs once these programs are complete. 

Tom Curtis, President of Burger King North America, commented, "We are committed to giving our Guests the very best experience in all our restaurants and that includes a modern, exciting restaurant image and digital experience that exceeds their expectations.  We are working in close partnership with our Franchisees to transform our restaurant footprint across the country and reclaim our flame as a leader in the QSR industry."

As part of the commitment to modernize restaurants across the U.S., seven months ago, BK revealed its next generation restaurant design – "Sizzle". The new design is a reimagined format grounded in all aspects of the Guest and Team Member experience and allows for flexibility to evolve the design based on new Guest service modes – with an emphasis on the digital, pick-up and drive-thru experience. Remodel projects as part of the Royal Reset 2.0 investment will feature the new Sizzle design.

Franchisees will have until October 31, 2024, to opt-in to Royal Reset 2.0 with the collective goal of modernizing the brand's image to elevate the Guest experience in Burger King restaurants across the U.S.

History of Announced Burger King Investment in the U.S. System:

Royal Reset 2.0 will be accounted for in the same manner as the initial Royal Reset remodel program. A royalty credit will be recognized over the franchise agreement period of up to 20-years as a contra-revenue in the "Franchise and property revenues" line of the income statement. The remodel investment will appear on the cash flow statement as a change in "Other long-term assets and liabilities" under "Cash flows from operating activities" at the time of remodel completion.

Franchisees participating in the program may elect for an increased royalty rate in exchange for a larger capital contribution which, all else being equal, would result in increased Franchise and property revenue.

ABOUT BURGER KING^®

Founded in 1954, the Burger King® brand is a global quick service hamburger chain known for food quality and value and as the only place guests can get the iconic flame-grilled Whopper® sandwich. The Burger King system operates more than 19,000 locations in more than 100 countries and U.S. territories. Almost 100 percent of Burger King restaurants are owned and operated by independent franchisees, many of them family-owned operations that have been in business for decades. To learn more about the Burger King brand, please visit the official brand website at www.bk.com or the newsroom at news.bk.com, and follow us on Facebook,  Instagram and TikTok.

About Restaurant Brands International Inc.

Restaurant Brands International Inc. is one of the world's largest quick service restaurant companies with over $40 billion in annual system-wide sales and over 30,000 restaurants in more than 120 countries and territories. RBI owns four of the world's most prominent and iconic quick service restaurant brands – TIM HORTONS®, BURGER KING®, POPEYES®, and FIREHOUSE SUBS®. These independently operated brands have been serving their respective guests, franchisees and communities for decades. Through its Restaurant Brands for Good framework, RBI is improving sustainable outcomes related to its food, the planet, and people and communities. To learn more about RBI, please visit the company's website at www.rbi.com. 

This press release includes forward-looking statements, which are often identified by the words "may," "might," "believes," "thinks," "anticipates," "plans," "expects," "intends" or similar expressions and reflect management's expectations regarding future events and operating performance and speak only as of the date hereof. These forward-looking statements include statements regarding: (i) the amount, timing and use of the additional investments related to remodels as well as digital, advertising and restaurant enhancements into the Burger King U.S. system; (ii) the expected financial impacts of the Reclaim the Flame investments on RBI's results of operations, including our expectations regarding the timing of the investments by BK; (iii) our expectations regarding the amount and timing of Franchisee co-investments in the Reclaim the Flame program; (iv) the completion of the acquisition of Carrols on the anticipated terms and timing, including obtaining required stockholder approval by Carrols' stockholders and the satisfaction of other conditions to the completion of the acquisition; (v) our ability to refranchise substantially all of the Carrols portfolio to smaller, local operators within 3 to 7 years; (vi) the percentage of modern image that will be achieved by the described initiatives; (vii) our expectation regarding not deploying additional capital toward remodels following these programs; and (viii) the anticipated accounting treatment of the investments associated with the investment program.

The factors that could cause actual results to differ materially from our expectations are detailed in filings of RBI with the U.S. Securities and Exchange Commission and with the securities regulatory authorities in each province and territory of Canada, such as its annual and quarterly reports and current reports on Form 8-K and include the following: (1) risks related to RBI's ability to successfully implement the investment plans and the ability of participating Franchisees to meet the profitability thresholds; (2) risks related to the franchised business model; (3) risks related to technology and the ability to successfully implement digital initiatives; (4) risks related to ownership and leasing of properties by us and our Franchisees; (5) risks related to our Franchisees financial stability and their ability and willingness to access and maintain the liquidity necessary to co-invest in the restaurant modernization initiatives; (6) risks related to the ability of the Burger King Franchisees to compete in an intensely competitive industry; and (7) changes in accounting, tax and other laws and regulations or interpretations thereof. Other than as required under U.S. federal securities laws or Canadian securities laws, we do not assume a duty to update these forward-looking statements, whether as a result of new information, subsequent events or circumstances, change in expectations or otherwise.

SOURCE Restaurant Brands International Inc.