Carrols Restaurant Group Inc., the largest Burger King franchisee in the United States, is installing self-order kiosks in about 250 restaurants, boosting its digital business, and also piloting the Sizzle remodel program, executives said this week.
Syracuse, N.Y.-based Carrols, which franchises 1,020 Burger King restaurants in 23 states as well as 60 Popeyes Louisiana Kitchen units in six states, released on Thursday its earnings for the third quarter ended Oct. 1, noting that same-store sales for its burger restaurants increased 8.1% and same-store sales for its Popeyes were up 11.7% in the period.
“Our digital business, including delivery and mobile, has also seen substantial growth and is now approaching 10% of our overall sales, a year-over-year increase of 300 basis points,” said Deborah Derby, Carrols president and CEO, said on an earnings call.
“There are two major areas, which we believe are contributing to this increase,” she continued. “First, the successful marketing and product launches by our franchisor, including the BK Royal Crispy Wraps, have amplified Burger King's relevance across demographic groups, including the younger consumer, which is generally more tech savvy. We've seen across the board improvements to both mobile and delivery in terms of comp sales, traffic, and average check.
“Second, delivery continues to benefit from our relatively strong dinner and late-night performance, with the latter continuing to be aided by our increased hours of operations,” Derby said.
Derby said Carrols is in the process of rolling out self-order kiosks at about 250 of its restaurants over the next four months with the majority of that investment being funded by Burger King's Royal Reset program. “While Burger King is still early in the testing and adoption process, we're encouraged by the results that they have seen thus far,” she said.
Royal Reset is part of the $400 million “Reclaim the Flame” investment that Toronto-based parent Restaurant Brands International Inc. committed to in September 2022.
Burger King Corp., which said the “Reclaim the Flame” initiative was to turn around its U.S. quick-service business, plans to evolve the program in the second year with a new Sizzle store design and “You Rule” marketing efforts, said Tom Curtis, president of Burger King U.S. and Canada.
Carrols, which has operated Burger Kings since 1976 and Popeyes restaurants since 2019, also opened the first ground-up Sizzle Burger King prototype, a format introduced recently at the company’s franchisee convention in Miami.
“We are excited to have the first ground-up Sizzle restaurant in the entire Burger King system, which just opened a couple of weeks ago in Marion, N.C.,” Derby said. Marion is northwest of Charlotte, N.C. “For 2024, we are planning for approximately half of our Burger King remodels to be in this new and improved image.
Derby said operational improvements in the quarter allowed Carrols “to increase our hours of operation by over 3% while reducing labor hours by about 2%, compared to the prior year period.
“We continue to see productivity efficiencies in labor with wage inflation decelerating to approximately 4%, manager and hourly turnover remaining stable and enhanced operational efficiency from our team members,” she said.
For the third quarter ended Oct. 1, Carrols swung to a profit of $12.6 million, or 20 cents a share, from a loss of $8.7 million, or 17 cents a share, in the same period a year ago. Sales increased 7.2%, to $475.8 million, from $444 million in the same quarter a year ago.
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