Burger King Revival Plan Includes More Ad Buys

Burger King on Friday said it plans to spend $400 million over the next two years on advertising and renovating its restaurants as part of a broader strategy to revive lagging U.S. sales.

CNBC reports the Restaurant Brands International chain unveiled a turnaround plan for its U.S. business in Las Vegas at its annual franchisee convention. The investments are expected to weigh on its adjusted earnings per share for 2022 and 2023 by 10 to 12 cents annually. The company expects the investments to start paying off by 2025.

In the second quarter, Burger King reported flat U.S. same-store sales growth, trailing behind rivals McDonald’s and Wendy’s. The burger chain has been reporting lackluster U.S. sales over the last year, causing concern for Restaurant Brands CEO Jose Cil. In his tenure as chief executive, Cil has also spearheaded efforts to revive Canadian demand for Tim Hortons, Burger King’s sister chain.

A year ago, Cil also tapped former Domino’s Pizza executive Tom Curtis as the new president for Burger King’s U.S. and Canadian restaurants. Early changes to Burger King included slimming its menu to speed up drive-thru times and cutting down its paper coupons to push customers to use its mobile app.

Now Burger King is preparing to make even bolder changes. It’s planning to spend $200 million to fund remodels of roughly 800 locations. Another $50 million will go toward upgrading about 3,000 restaurants with technology, kitchen equipment and building enhancements. The company has more than 7,000 Burger King locations in the U.S.

Historically, remodeled restaurants see an average sales increase of 12% in their first year and outperform older locations over time, according to Burger King. The company is hoping that being more selective and strategic with its projects will produce even stronger sales growth, although it could take longer to see results.

Burger King will also increase its U.S. advertising fund’s budget by 30% by investing $120 million over the next two years. Those investments will start in the fourth quarter.

“We expect that to start having an impact on sales over the next quarter,” Cil said.