Premier Kings Inc., a 172-unit franchisee of Burger King Corp. in five Southeast states, has filed for Chapter 11 bankruptcy protection.
Premier Kings of Montgomery, Ala., and its affiliates filed the bankruptcy petition Oct. 26 in U.S. Bankruptcy Court for the Northern District of Alabama. The owner and sole manager of the company, Manraj “Patrick” Sidhu, died unexpectedly in May 2022.
David Baker, the company’s chief restructuring officer, said the debtors have in excess of 200 creditors and operate 172 Burger King franchise locations throughout Alabama, Florida, Georgia, South Carolina, and Tennessee.
Burger King parent Restaurant Brands International Inc. plans to finalize its reduction in under-performing units during the final quarter of the year, intent on starting 2024 with a stronger brand portfolio, executives said earlier this month.
The Toronto-based company, which also owns the Tim Hortons, Popeyes Louisiana Kitchen and Firehouse Subs brands, released earnings for the third quarter ended Sept. 30, noting that Burger King’s U.S. business had flat traffic in the period.
“Looking ahead, we are expecting roughly $10 million of net bad debt expense in Q4 ‘23 predominantly related to Burger King U.S.,” said Matthew Dunnigan, RBI chief financial officer, on an earnings call. “We have been working closely with franchisees to transition restaurant portfolios into the hands of strong local operators over the past few quarters.
“We prioritized the most distressed situations, closing unviable restaurants and cleaning up a number of portfolios,” Dunnigan said. “We expect to largely finalize the remainder of those workouts and closures by end of year, resulting in elevated bad debt for Q4 but with the benefit of a much-improved foundation entering 2024.”
The Premier Kings bankruptcy filing was the third among Burger King franchisees this year.
In January, TOMS King Holdings LLC filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of Ohio at the start of the year and received bids for 82 of its 90 Burger King locations.
The TOMS King bankruptcy petition was followed in March by one from Meridian Restaurants Unlimited LC, based in South Ogden, Utah, which franchised about 120 Burger King restaurants in nine states.
David Baker, Premier Kings chief restructuring officer, in filings said the company and its affiliates own real estate leased to Burger King or Popeyes restaurants, or operate other restaurant brands.
The sole owner is now Joginder Sidhu, personal representative for the estate of Manraj Sidhu, Baker said.
Restaurant sales in 2021 were $233.3 million and, in calendar year 2020 were $255. Companywide, Premier Kings employed nearly 3,600, Baker said. In 2022, sales slipped to $223 million and the company had a net loss of $27 million, documents said.
Earlier this year, Premier Cajun Kings LLC, which operated 19 Popeyes units in Alabama and Georgia, filed for Chapter 11 bankruptcy protection. Baker, as managing partner of Atlanta-based Aurora Management Partners, was named lead chief restructuring officer in that filing as well.
Premier Kings was founded in 2009. It began with six franchised Burger King restaurants around Birmingham, Ala., and then added 34 locations to the portfolio throughout Alabama, Georgia, and Tennessee over the course of 2014.
“PK continued to grow between 2015 and 2021, opening 115 additional locations in Tennessee, Florida, and South Carolina,” Baker said. “As of the petition date, PK Inc. owns 53 restaurants, PKGA Inc. owns 82 restaurants, and PKNA LLC owns 39 restaurants.
“Mr. Sidhu passed away unexpectedly on May 24, 2022, which triggered great operational instability for PK’s existing restaurants, as Mr. Sidhu was not only the sole stockholder or member, but also sole manager,” Baker said.
“As of Sept. 30, 2023, the debtors’ balance sheets reflect assets of approximately $134.5 million and liabilities of approximately $123.1 million,” Baker said.
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