BK Franchisees Halt Growth Plans, Say Brand Must Beef Up
Miami-Several top Burger King franchisees, citingcontinuing poor performance for the brand, have pulled back ontheir plans for expansion of the concept.
Pointing to a rut of sluggish or negative same-store sales, thefranchisees said they've either tempered or halted growth untilthe chain's new corporate management is able to turn the brandaround. The list includes the two largest franchisees in the8,200-unit Burger King system: AmeriKing, based in Westchester,Illinois, and Carrols Corp. of Syracuse, New York.
AmeriKing's expansion of the brand "literally stoppedwithin the last year," says Lawrence Jaro, CEO of the No. 1Burger King franchisee. The company, he says, wanted "to makesure the business was going the other way and not justsouth."
Rob Doughty, Burger King's vice president of corporatecommunications, says he has no comment on the statements made bythe company's two largest franchisees.
"We will acknowledge that we have had some soft sales, andwe understand some franchisees are feeling economic pressure, butwe don't make comments on that," Doughty says.
Over the past year, a number of Burger King franchisees havereported financial difficulties brought about by over-leveraging ofdebt for expansion purposes. The debt load proved too heavy whensales began to sag.
Jaro claims AmeriKing had been Burger King's mostaggressively expanding franchisee, building about 20 stores a yearand buying somewhere between 20 and 40 additional stores. But thecompany put the brakes on expansion about a year ago as it saw itssame-store sales slide into the negative range of 6 to 8 percent infiscal 2000. Year-to-date same-store sales followed the sametrend.
Jaro said the company is waiting for its same-store sales toclimb out of negative numbers before looking at additional growth.He adds that the company is current on its loan payments. "Wedo believe in the brand and would like to expand, but not until thebrand starts performing," Jaro says. -Nation'sRestaurant News