Burger King Bankruptcy. Hundreds of Stores Closing. Why?

From dirty bathrooms, employees with their feet in salad bins, rodents and insects in kitchens hundreds of Burger King stores are closing or going bankrupt. Is it time for the iconic brand to admit defeat?

A major operator in the Burger King system announced recently they were declaring bankruptcy. This was 90 more of the hundreds of BK stores closing as we will look at in a minute.
TOMS King, a franchisee who owned 90 BK stores in Ohio, Pennsylvania and Virginia announced that their revenues during the period of the Coof had decreased and they had brought on over 35 million in secured debt and 14 million in unsecured debt. Apparently 200 potential purchasers have been contacted to buy the struggling locations. Can you think of a better investment than restaurants losing millions?

If we look at net closures we see in 2020 Burger King closed 265 stores and growth has been very sluggish since 2019. You might wonder how is McDonalds doing comparatively? Well they aren't that great either closing 44 stores in 2019, 163 in 2020, and 247 in 2021 And these are net numbers with stores sold backed out, so actual closures are going to be even higher.

A wise person once said you cant step in the same river twice. Many investors buy these massive brand names assuming they are the most reliable, and usually have heard of someone who bought 10 years ago and made a lot of money. But, every franchise system has a lifecycle, emergence, growth, peak, and ultimately decline. If you want to experience the same success of people who bought in 10 or twenty years ago buyers should consider looking at emerging, well positioned brands and grow along with the system. Also a newer franchise still has great territories available while all the major brands have only leftover crumbs remaining unless you buy a resale for several million dollars.

A quick comparison even between Burger King and McDonalds shows that for a similar investment an average McDonalds generates 3.4 million while an average Burger King does only 1.4 million, less than half of a McDonalds.

So why do people buy Burger King? Well in many cases they just didn't have access to the numbers of other franchise earnings, they didn't call Franchise City, or in some cases its the prestige of the Burger King Name. But is the Burger King name still what it once was?

To me, Burger King smacks of a declining brand unable to alter its course. In my opinion it is far more likely to see a filthy Burger King Bathroom than a dirty McDonalds. Let me know if you agree. From Roaches and rodents, to filthy kitchens with employees standing in lettuce bins or mopping the tables using the filthy floor mop, these are things you don't see as often in other brands. Burger King on the whole just doesn't seem to be as buttoned up on keeping independent operators supporting a consistent standard. That seems to translate directly to profits.

The brand also seems out of touch with some ad campaigns maybe trying a bit too hard. Burger King got into hot water recently with their advertising that offered two equal buns available for pride month. So you could get two top buns or two bottom buns. Even the LGB TQ community said thanks but you guys are just being gross.

And yes, this is the same Burger King that today is trying to seem like incredibly virtuous citizens, but a few years ago created the ad for their "7 incher" “It’ll blow your mind away. Fill your desire for something long, juicy and flame-grilled with the New BK Super Seven Incher.”

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