Burger King parent Restaurant Brands International Inc. will be accelerating part of its planned “Reclaim the Flame” $400 million investment in the U.S. business, executives said Tuesday.
The Toronto-based RBI, which released its fourth quarter earnings Tuesday, said the Royal Reset program has spent about $17 million, including $15 million for new point-of-sale terminals, kitchen display screens and indoor digital menu boards. Those are being deployed this month, said Joshua Kobza, the chief operating officer who will be succeeding José Cil as CEO on March 1.
“To better capitalize on the momentum, we're seeing in the business we've decided to accelerate our timeline and now expect to deploy the majority of our announced $50 million Royal Refresh spend in 2023,” Kobza said. RBI also owns the Tim Hortons, Popeyes Louisiana Kitchen and Firehouse Subs brands.
During the fourth quarter, he said, “We also continued working through applications for our Royal Reset remodel program, which provides up to $200 million of funding for high-quality remodels prioritizing restaurants operators and remodels that offer the greatest potential to deliver the highest returns for our franchisees.”
The Royal Reset program investments are matched dollar for dollar by participating franchisees, who are upgrading kitchen equipment like fryers and broilers as well as improving properties with lighting and signage, Kobza said.
“We've mentioned before that quality over quantity is a key priority for this program,” Kobza added, “and I'm pleased to see franchisees also embracing this mindset. Nearly a quarter of the remodel applications are for scrape and rebuilds. While these scrapes are the most intensive capital project type, they also see the highest sales uplift and position the brand for success in their markets for decades to come.”
Burger King in September unveiled its plans to invest $400 million over the next two years in advertising, digital platforms, technology, remodels and relocations to spur franchise growth in the United States.
The company said its “Reclaim the Flame” plan included $150 million in advertising and digital investments over the next two years and $250 million for restaurant technology, kitchen equipment, building enhancements, remodels and relocations.
Patrick Doyle, the former Domino’s Pizza CEO who was named RBI’s executive chairman in November and investment $30 million in the company, said the Kobza-Cil transition comes as the company has growth in mind.
“This is about setting ourselves up for an accelerated pace of growth for the next five to 10 years,” Doyle said in the call. “The board of directors has been disciplined about succession planning. We have an exceptional leader with all the relevant experience we need here.”
Kobza is “ready to drive what we believe will be a new era of growth for the company,” Doyle said. Cil will remain as an adviser for the next year.
“My own mandate here at RBI is to rapidly accelerate the growth of the company by identifying areas that can deliver outsized results,” Doyle added.
For the fourth quarter ended Dec. 31, RBI’s net income was $336 million, or 74 cents a share, up from $262 million, or 57 cents a share, in the prior-year period. Revenues rose to $1.689 billion from $1.546 billion in the same quarter last year.
RBI said its fourth-quarter consolidated same-store sales, excluding Firehouse Subs, were up 7.9%, with increases of 9.4% at Tim Hortons, 8.4% at Burger King and 3.8% at Popeyes.
As of Dec. 31, RBI had 30,722 restaurants systemwide, including 19,789 Burger Kings, 5,600 Tim Hortons, 4,091 Popeyes and 1,242 Firehouse Subs.
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