This is how Burger King will be saved in America
There’s more meat to Burger King’s revival plans in America than simply reclaiming the flame from the iconic Whopper sandwich.
At least that’s the reading of Evercore ISI’s restaurant analyst team, who just spent half a day with the management team of Burger King’s parent company, Restaurant Brands.
“Aspects of Burger King’s U.S. turnaround plan include simplifying menus to improve ordering accuracy and speed of service, a more balanced value offering (e.g., new $5 meal launched in January), loyalty/digital (9% of sales) and workforce retention (work hours are down from 2019) The hiring of a new advertising agency and with it a new plan marketing is likely in the second half of 2022. During the COVID period, we suspect that Burger King’s focus on value (continuation of limited-time offers, paper coupons, $1 menu) coupled with food availability issues labor added to complexity which hurt ordering accuracy, speed of service (drive-through times increased 20% year-over-year), and degraded consumer experience. We believe that Burger King seeks to become p smarter about value, including removing paper coupons (increasing digital) and reducing heart discounts (e.g. Whopper). We believe Burger King’s turnaround will likely materialize in 2023,” said EvercoreISI analyst David Palmer.
If BK could pull off a Whopper revival, it would go a long way to improving the chain’s sales trends which have been mixed at best.
Burger King’s U.S. same-store sales rose 1.8% in the fourth quarter, trailing a 7.5% gain at big rival and Big Mac seller McDonald’s. For the year, BK’s same store sales in the United States increased 4.7%.
Same-store sales fared better for Burger King overseas, growing 13.6% for 2021.
Luckily for restaurant brands, a few other brands are clicking on all cylinders.
Worldwide fourth-quarter same-store sales for the Firehouse Subs brand jumped 14.7% from a year ago in the fourth quarter. Global same-store sales jumped 20.9% in 2021.
The company acquired the brand in November 2021.
Meanwhile, Tim Horton’s comparable store sales overall rose 10.3% in the fourth quarter.
Palmer also expects the appearance of Burger King restaurants to change to stimulate consumer interest.
“As well as improving store operations, we also expect to hear of a bold reimagining plan (30% reimagined today) with aspects of the renovations considering a combination of drive-thru sales higher than levels pre-COVID 65% (today ~90%) We also expect the company to provide capital and provide short-term royalty relief to franchisees to expedite efforts, including relocations. ; new agency advertising) in the second half of 2022,” Palmer added.
But hey, it doesn’t hurt Burger King is going big on its most well-known sandwich, the Whopper. The company just launched three new melted Whopper sandwiches nationwide.
“We felt it was important to invest behind and elevate the flagship and iconic product, and ensure that it becomes the centerpiece of our game plan going forward,” said José Cil. , CEO of Restaurant Brands, on Yahoo Finance Live.
Brian Sozzi is editor-in-chief and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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