The Burger King location on North Temple and and 1660 West in Salt Lake Metropolis is now closed as pictured on Monday, April 17, 2023. Scott G Winterton, Deseret Information
A big-scale Burger King franchisee based mostly in Ogden that operates over 100 of the fast-food eating places throughout a number of states is about to shut dozens of its shops, together with 9 in Utah.
Meridian Eating places Limitless, which operates 116 Burger Kings, filed for Chapter 11 chapter protections in March however in a court docket submitting earlier this month listed 27 Burger King shops it plans to shut together with Utah eating places in Clearfield, Draper, Heber, Lehi, Salt Lake Metropolis, Sandy (two closures) and Saratoga Springs. An entire record of closures, as reported by Meridian in court docket filings, is posted right here.
Based on Restaurant Enterprise Journal, Meridian can also be leaving open the potential of extra closures forward, saying “it's attainable, if unlikely,” that additional evaluation suggests extra closures are “applicable.” However the firm in a submitting mentioned that it doesn’t anticipate closing “all or perhaps a substantial portion of their eating places.”
In a submitting in U.S. Chapter Court docket for the District of Utah dated April 4, Meridian famous that “over the previous a number of years, and significantly on account of the COVID-19 pandemic, franchisees systemwide have skilled declining foot site visitors.” Meridian mentioned whereas its companies “suffered considerably from lack of foot site visitors leading to declining income,” prices like lease, debt service and different monetary obligations didn't see commensurate declines. Meridian additionally cited the impacts of exterior pressures on its fiscal well being, together with latest will increase in wages (33% the previous few years) and the price of labor, transport and meals inflation (22% the previous two years), based on the court docket submitting.
Meridian mentioned it had gross sales volumes beneath the common for Burger King franchises, which reportedly herald round $1.4 million per yr. And whereas some eating places had been worthwhile, others had been working at a loss.
Meridian additionally operates some Black Bear Diner eating places, although that chain is just not talked about in court docket filings.
Meridian is considered one of two large-scale Burger King operators to file for chapter this yr whereas a 3rd closed 26 eating places in Michigan, based on Restaurant Enterprise Journal. Burger King franchise operators have struggled with weak gross sales and weak profitability at a time when prices have soared.
Meridian Eating places Limitless couldn't be reached by telephone Monday and didn't instantly reply to a Deseret Information e-mail searching for touch upon the chapter continuing.
Based on a report from The Wall Avenue Journal final fall, Burger King’s guardian firm, Toronto-based Restaurant Manufacturers, has put in new government management and earmarked $400 million to spice up promoting and revamp every little thing from restaurant design to the best way Burger King’s flagship burgers are constructed.
Executives informed The Wall Avenue Journal that overly complicated menus, gradual operations and outdated eating places have tarnished Burger King’s standing with diners and buyers.
In 2021, Burger King employed longtime Domino’s Pizza government Tom Curtis to supervise Burger King’s U.S. enterprise. Curtis has highlighted points in Burger King’s kitchen operations together with challenges with standardization and a few menu objects, just like the Ch’King hen sandwich, as including an excessive amount of complexity for employees, based on the Journal’s report.
Meridian’s introduced closures come amid ongoing monetary woes for Burger King which held down the No. 2 spot for years on the subject of U.S. gross sales revenues for quick meals chains. It now trails McDonald’s, Wendy’s and Chick-fil-A.
However whereas Burger King has struggled, different U.S. quick meals companies have been on a tear of late, thanks largely to inflation-weary clients in search of offers on the subject of their meals purchases.
Earlier this yr, McDonald’s reported same-store gross sales grew by over 10% within the final quarter of 2022, the second straight quarter of elevated buyer site visitors on the firm’s U.S. shops.
“Total, the patron, whether or not it’s in Europe or within the U.S., is definitely holding up higher than what we might have most likely anticipated a yr in the past or six months in the past,” CEO Chris Kempczinski mentioned in a January earnings name, per CNBC.
McDonald’s experiences plans to open 1,900 new eating places. Greater than 400 of these might be within the U.S. and worldwide operated markets, whereas the remainder might be opened by developmental licensees.
Yum Manufacturers, which franchises or operates KFC, Taco Bell, Pizza Hut and Behavior Burger eating places, reported fourth quarter internet gross sales rose 7% over the identical time final yr. That development was pushed largely by Taco Bell shops, the corporate’s greatest model, which noticed same-store gross sales develop by 11% within the ultimate quarter of 2022.
The U.S. quick meals — or fast service — restaurant sector generated over $330 billion in 2022 based on an estimate from enterprise knowledge web site Statista.