Burger King, once known for being more expensive than its competitors, is facing significant bankruptcy issues. The franchise owner, Meridian Restaurants Unlimited LLC, cited difficulties in recovering from the complications caused by the COVID-19 pandemic. Factors such as increased wages, shipping and operational costs, food inflation, and declining traffic contributed to their financial struggles, which left them burdened with debt. Prior to the bankruptcy, Meridian Restaurants owned two brands, Burger King and Black Bear Diner.
To revive its business, Burger King announced a $400 million “Reclaim the Flame” comeback plan in September 2022. As part of this plan, the chain will close 300 to 400 underperforming restaurants across the United States. Similarly, Applebee’s is also expected to close 25 to 35 restaurants by the end of 2023 due to similar performance issues. These closures align with Burger King’s geographical concentration strategy, which aims to limit franchisees to operating 50 stores within the same region.
The dissolution of Meridian’s Burger King units reflects a shift in how the company plans to handle its franchisees in the future. By limiting operators to 50 stores within a specific region, Burger King aims to avoid the frequent dismantlement of large franchisees in federal bankruptcy court. Although this may be a setback for Burger King, it signifies a strategic approach to address financial challenges and ultimately ensure the stability of its franchise network.
