In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Burger King franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Burger King franchise, based on Item 7 of the company’s 2019 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Burger King franchise, based on Items 5 and 6 of the company’s 2019 FDD
- Section IV – Number of franchised and company-owned Burger King outlets at the start of the year and the end of the year for 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD
- Section V – Presentation and analysis of Burger King’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:
- sales distribution (above $1.9 million, $1.7 million to $1.9 million, $1.5 million to $1.7 million, $1.3 million to $1.5 million, $1.1 million to $1.3 million, $0.9 million to $1.1 million, $0.7 million to $0.9 million, below $0.7 million) for company-owned, franchised, and consolidated traditional and non-traditional Burger King restaurants with 12 months of actual sales as of December 31, 2018 (separately stated)
- 2018 average, median, high, and low sales for company-owned, franchised, and consolidated traditional and non-traditional Burger King restaurants with 12 months of actual sales as of December 31, 2018 (separately stated)
- 2018 average and median sales for franchised traditional Modern and Legacy Image Burger King restaurants that were open for the full 12 months ended December 31, 2018 (separately stated)
Section I – Background Information
25 Things You Need to Know About the Burger King Franchise
Launches Impossible Whopper Nationwide
1. In early August 2019, Burger King rolled out its plant-based Impossible Whopper sandwich nationwide. Starting on August 8, customers across the nation were able to visit their local BK restaurant, or order for delivery via the BK App and through DoorDash, to try the Impossible Whopper for a limited time only and decide for themselves if it delivers the same flame-grilled, juicy craveability of the famous Whopper sandwich.
2. The Impossible Whopper is 100 percent Whopper, zero percent beef. It features a flame-grilled patty made from plants, topped with freshly sliced tomatoes and onions, crisp lettuce, creamy mayonnaise, ketchup, and zesty pickles on a toasted sesame seed bun.
3. Chris Finazzo, president, North America, Burger King Corporation, said, “We are really excited to be able to offer our new Impossible Whopper to our guests across the country at an unbeatable value for a limited time. Since we first launched our market tests in St. Louis in April, and later in six other markets across the country, we’ve heard great feedback and know the Impossible Whopper appeals to both current guests who are already big fans of the Whopper sandwich, as well as new guests who are excited about this new option. Starting next week, guests across the country will be able to try this plant-based, flame-grilled sandwich which is true to the original Whopper sandwich that our guests know and love.”
4. Before the nationwide launch of the Impossible Whopper, the Impossible burger was hard to find despite being in high demand and that often led to fans going to social media to find out where the Impossible burger was available.
5. In a new video, BK found fans to come to the grand opening of what they thought would be a restaurant that only serves the Impossible burger. The outside of the location looked like an Impossible foods restaurants, but it was really a Burger King restaurant in disguise. Fans were surprised but delighted when they walked inside and saw it was actually a BK restaurant and realized that they could now purchase an Impossible Whopper at over 7,000 BK locations across the country to satisfy their Impossible craving.
Adds Delivery Through Uber Eats
6. In late October 2019, Burger King announced that it had added nationwide delivery through Uber Eats. “At Burger King restaurants, delivery is a major priority to ensure our food is available to anyone, anywhere,” says Chris Finazzo, president, North America, Burger King Corporation. “We know our guests value convenience and adding the Burger King brand to Uber Eats is another way we will meet the demands of millions of people on this platform.”
7. To kick off the partnership, the King himself “paid a visit” to several hundred houses in LA to surprise and delight fans with a surprise message.
8. Janelle Sallenave, head of Uber Eats, US & Canada, said, “We’re thrilled to team up with Burger King restaurants to offer their beloved menu items to Uber Eats customers across the country. A long history of innovation coupled with high-quality delicious food and brilliant marketing makes BK a perfect addition to Uber Eats.”
Plans to Open 100-Plus Restaurants in Canada
9. At the beginning of December 2019, Burger King announced plans to open more than 100 restaurants in Ontario and Manitoba over the next five years. As part of this new agreement, about 10 restaurants are planned to be opened in 2020 in Southwestern Ontario to serve up flame-grilled goodness to millions of Canadians every year.
10. To drive growth in the underpenetrated burger market of Canada, Burger King Canada has inked a new five-year expansion deal with long-time partner Redberry Restaurants, to grow the number of Burger King restaurants in Canada by 25 percent so even more people can enjoy the iconic flame-grilled Whopper sandwich, chicken fries, and other Burger King favorites.
11. According to Matt Wright, general manager, Burger King Canada, “For far too long, Canadian burger lovers have not had enough flame grilled options to choose from. Premium ingredients and signature recipes have defined Burger King for 50 successful years in Canada. We’re excited that even more Canadians will be introduced to the iconic Burger King brand and our great tasting food.”
12. Burger King made international waves in the burger industry throughout 2019. From announcements about expansion in China and plans to open to the first Burger King restaurant
in the Baltics, to the launch of two plant-based burgers in the U.S. and Europe – the Impossible Whopper and the Rebel Whopper sandwiches – the brand is growing.
13. Ken Otto, CEO of Redberry, added, “We are so excited to expand the Burger King brand in Canada. We’ve been a proud Burger King Canada partner for 15 years and we can’t wait to light the fire in those grills in more than 100 brand new locations.”
Releases Ad Showing Its Iconic Whopper Covered in Mold
14. In mid-February 2020, Burger King pulled off a surprising global integrated advertising campaign showing its iconic Whopper sandwich covered in mold. Instead of featuring its product with the classic, flawless, and often perfect photographic style commonly used to showcase fast food products, Burger King let its most iconic product rot to make a powerful statement.
15. The brand has achieved a milestone by removing artificial preservatives from the Whopper sandwich in most European countries and select markets in the U.S. Additionally, the brand has removed colors and flavors from artificial sources from all core menu sandwiches and sides in those European countries and across the United States.
16. Christopher Finazzo, president, Americas, Burger King Corporation, said, “The Burger King brand is currently rolling out the Whopper sandwich with no preservatives, colors, or flavors from artificial sources in the U.S. The product is already available in more than 400 restaurants in the country and will reach all restaurants throughout the year.”
17. From the bun to the freshly sliced onions, tomatoes and lettuce, and the 100 percent beef patty – the striking images show the real mold that grows on every piece of the iconic burger. The ads make a reference to the number of days that have passed since the sandwich was prepared, and a line reads, “The beauty of no artificial preservatives.”
18. Fernando Machado, global chief marketing officer of Restaurant Brands International, said, “At Burger King restaurants, we believe that real food tastes better. That’s why we are working hard to remove preservatives, colors and flavors from artificial sources from the food we serve in all countries around the world.”
19. Burger King traces its history back to 1953 when Keith J. Kramer and his wife’s uncle, Matthew Burns, started Insta-Burger King in Jacksonville, Florida after being inspired by the McDonald brothers’ original store in California. Kramer and Burns purchased two pieces of equipment called the Insta-Broiler and decided to cook their burgers with the machines to stand out from other fast food burger concepts. Since the Insta-Broiler was so effective at cooking burgers, Kramer and Burns eventually required every franchise to use the machines.
20. Over the next few years, Insta-Burger King continued to expand and two friends named James McLamore and David R. Edgerton became franchisees in 1954. McLamore and Edgerton noticed that the Insta-Broiler’s heating elements eventually degraded because of the meat drippings. So, they decided to make a new machine, the flame broiler. This new machine worked out better and McLamore and Edgerton changed out all of their Insta-Broilers.
21. Although Burger King continued to grow, by 1959, the company was faltering. Nevertheless, McLamore and Edgerton acquired the national rights to the chain and changed its name to Burger King. In addition to creating Burger King’s now signature flame broiler, McLamore and Edgerton also came up with the Burger King mascot and the chain’s signature sandwich, the Whopper.
22. McLamore and Edgerton continued to grow Burger King over the next decade before selling it to the Pillsbury Company in 1967. Pillsbury’s management tried several times to restructure Burger King during the late 1970s and the early 1980s. Burger King’s sales declined over the next few decades and major franchises were driven out of business. The twenty-first century saw the company return to independence when it was purchased from Diageo by a group of investment firms led by TPG Capital for $1.5 billion in 2002.
23. TPG Capital immediately worked on reorganizing and revitalizing Burger King. These measures did initially work, but Burger King was hit hard during the financial crisis of 2007-2010 and in 2010, private equity company 3G Capital purchased Burger King for $3.26 billion.
24. In 2014, 3G announced that it planned to acquire the Canadian restaurant and coffee shop chain Tim Hortons and merge it with Burger King with backing from Warren Buffett’s Berkshire Hathaway. Both Burger King and Tim Hortons, as well as Popeyes, are run by Restaurant Brands International, which is majority-owned by 3G Capital.
Entrepreneur’s Franchise 500
25. Burger King did not rank on Entrepreneur’s 2020 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Burger King franchise costs, based on Item 7 of the company’s 2019 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Burger King’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2019 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 7,076
- Outlets at the End of the Year: 7,105
- Net Change: +29
- Outlets at the Start of the Year: 7,105
- Outlets at the End of the Year: 7,176
- Net Change: +71
- Outlets at the Start of the Year: 7,176
- Outlets at the End of the Year: 7,280
- Net Change: +104
- Outlets at the Start of the Year: 51
- Outlets at the End of the Year: 51
- Net Change: 0
- Outlets at the Start of the Year: 51
- Outlets at the End of the Year: 50
- Net Change: -1
- Outlets at the Start of the Year: 50
- Outlets at the End of the Year: 50
- Net Change: 0
Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis
- This Item 19 includes certain information about Gross Sales of franchised and company-owned Burger King Restaurants in the United States during the 12-month period ended December 31, 2018 (“Sales Distributions”).
- Gross Sales reported in this Item has the same meaning as the term Gross Sales in the Franchise Agreement; that is, all sums charged for goods, merchandise, or services sold at or from the Restaurant and from any other approved location, but excluding sales taxes.
- Sales Distributions are provided separately for “Traditional Restaurants” and “Non-Traditional Restaurants”.
- Sales Distributions are also provided for Modern Image “Traditional Restaurants” compared to Legacy Image “Traditional Restaurants” as those terms are defined in this Item.
- For purposes of this Item, “Non-Traditional Restaurants” include the following types of Burger King Restaurants:
- (1) In-line facilities;
- (2) Restaurants or food courts at institutional locations (such as airports, military facilities,
colleges, schools, office buildings, retail stores, tourist locations, and turnpikes);
- (3) Conversion restaurant facilities;
- (4) Drive-thru only facilities;
- (5) Mall location facilities;
- (6) Mobile restaurant units (buses/trailers);
- (7) Big box retail; and
- (8) Fuel co-branded restaurants.
- For purposes of this Item, “Traditional Restaurants” are all Restaurants other than those included as “Non-Traditional Restaurants”.
- There were 6,893 franchised Restaurants and 47 company-owned Burger King Restaurants open during the entire 12-month period ended December 31, 2018.
- The Sales Distributions presented here do not reflect the sales distributions of all the varying facility types or sizes or facility locations.
- Some Restaurants have sold these amounts. Your individual results may differ. There is no assurance you’ll sell as much.
- The data used in preparing the information in this Item has been prepared on a basis consistent with generally accepted accounting principles to the extent applicable.
- Burger King has not independently confirmed Gross Sales or other information reported by franchisees for franchisee-owned Restaurants, but has relied on the Gross Sales and other information as reported by franchisees.
Part 1 – Sales Distribution of Traditional and Non-Traditional Burger King Restaurants (January 1, 2018 to December 31, 2018)
- The information provided in this Sales Distribution is sales information for a total of 6,115 Restaurants treated as “Traditional” Restaurants for purposes of this Item. Of those Restaurants, 6,068 were franchisee-owned and 47 were company-owned as of December 31, 2018.
- Only those Restaurants with 12 months of actual sales as of December 31, 2018 are reported in this chart. As a result, 2 company-owned Restaurants and 99 franchisee-owned Restaurants that were opened before 2018 and temporarily closed during the year were not included.
- In addition, 0 company-owned Restaurant and 87 franchisee-owned Restaurants that were permanently closed in 2018 were not included. All of these Restaurants had been operated for more than 12 months.
- The 170 franchisee-owned Restaurants that opened in 2018 without 12 months of sales were not included.
- Due to rounding, percentages may not equal 100%.
Above $1.9 million