There is more meat to the plans to revive Burger King in America than simply reclaiming the flame of the iconic Whopper sandwich.
At least that’s the read for the restaurant analyst team at Evercore ISI, which just spent a half day with the management team at Burger King parent company Restaurant Brands.
“Aspects of the Burger King U.S. turnaround plan includes menu simplification to improve order accuracy and speed of service, a more balanced value offering (e.g., new $5 meal launched in January), leveraging loyalty/digital (9% of sales) and labor retention (labor hours are down versus 2019). Hiring a new ad agency and with it a new marketing plan is likely in the second half 2022. During the COVID period, we suspect that Burger King’s focus on value (chasing limited-time offerings, paper couponing, $1 menu) coupled with labor availability issues added complexity that hurt order accuracy, speed of service (drive-thru times up 20% year over year) and degraded the consumer experience. We believe Burger King is looking to get smarter on value including pulling back on paper couponing (increasing digital) and less discounting the core (e.g., Whopper). We believe the Burger King turnaround will likely build in 2023,” said EvercoreISI analyst David Palmer.
If BK could pull off a Whopper revival, it would go a long way to improving the chain’s sales trends which have been mixed at best.
Burger King’s U.S. same-store sales rose 1.8% in the fourth quarter, trailing a 7.5% gain at arch rival and Big Mac seller McDonald’s. For the year, BK U.S. same-store sales rose 4.7%.
Same-store sales have fared better for Burger King overseas, with a 13.6% increase for 2021.
Luckily for Restaurant Brands it has a few other brands clicking on all cylinders.
Global fourth quarter same-store sales for the Firehouse Subs brand surged 14.7% from a year ago in the fourth quarter. Global same-store sales surged 20.9% in 2021.
The company acquired the brand in November 2021.
Meanwhile, same-store sales at Tim Horton’s globally rose 10.3% in the fourth quarter.
Palmer also expects the look of Burger King restaurants to change to boost consumer interest.
“In addition to improving store operations, we also expect to hear about a bold reimaging plan (30% reimaged today) with aspects of the remodels contemplating higher drive-thru sales mix than pre-COVID levels of 65% (today ~90%). We also would expect the company may contribute capital and offer some short-term royalty relief to franchisees to accelerate the efforts including relocations. We expect the company to share details on its bold store reimage plans and marketing message (e.g., focus on the Whopper; new advertising agency) in the second half of 2022,” Palmer added.
But hey, it doesn’t hurt Burger King is going big on its most well-known sandwich the Whopper. The company just debuted three new Whopper sandwich melts nationwide.
“We felt it was important to invest behind it and elevate the flagship and iconic product, and make sure that it becomes the centerpiece of our game plan going forward,” said Restaurant Brands CEO José Cil on Yahoo Finance Live.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, YouTube, and reddit
