Burger King reported higher-than-expected US sales in the first quarter, suggesting that efforts to spruce up restaurants and win back customers are working.
The chain, which is in the second year of a project to remodel locations, bolster advertising and reduce customer complaints, said same-store sales in the US and Canada grew 3.8%. The results surpassed the average estimate of analysts polled by Bloomberg.
Burger King’s parent company, Restaurant Brands International Inc., also posted overall same-store sales that beat expectations. Earnings, excluding some items, were 73 cents per share, virtually in-line with estimates. Restaurant Brands also owns Tim Hortons, Popeyes Louisiana Kitchen and Firehouse Subs.
Restaurant Brands shares rose more than 4% to $76.90 as of 11:12 a.m. In New York.
Burger King, founded in 1954, has become a focus at Restaurant Brands after it fell behind rivals such as Wendy’s Co. After years trailing McDonald’s Corp.
The chain is improving its US locations and working on customer service. For example, employees are now required to offer cardboard crowns to each diner without exception. The company plans to acquire its largest franchisee, Carrols Restaurant Group Inc., in a $1 billion deal to speed up the remodeling plan, while bolstering staff training and adding ordering kiosks. The deal is expected to close this quarter.
Burger King also said it planned to spend an additional $300 million to accelerate renovations, bringing Restaurant Brands’ investments in the brand to more than $2 billion. The extra funds set the chain on a path to update between 85% and 90% of its restaurants by 2028, the company said in a separate announcement.
“That means almost every time somebody sees a Burger King, it’s going to be a new and fresh restaurant, which is a little bit different than where we are today,” Tom Curtis, president of Burger King US and Canada, said in an interview.
All new locations will have kiosks, Curtis said. The plan has also helped boost franchisee profitability, according to the company, and increased sales for restaurants that have been remodeled.