Burger King's Largest Franchisee Achieves Positive Traffic Growth Sooner Than Expected

Estimated read time: 4 minutes and 36 seconds

COMEBACK SZN

Burger King’s Turnaround Gains Traction (Read Here)

The chain’s largest franchisee, Carrols Restaurant Group, reports positive traffic growth and increased profitability.

• Optimization Effort: Burger King’s rethinking strategy led to the closure of underperforming stores and stronger relationships with well-capitalized operators.

• Symbiotic Commitment: Carrols and Burger King collaborated to prioritize high-return projects for the chain's recovery.

• Sizzle Prototype: Carrols opened the first ground-up Sizzle model, a new design enhancing the guest experience through digital improvements.

• Kiosk Rollout: Carrols plans to bring kiosks to over 250 locations, funded by Burger King's Royal Reset initiative to update equipment and technology.

• Product Success: Carrols saw traction with the BK Royal Crispy Wraps and experienced growth in digital and mobile sales.

• Increased Guest Satisfaction: Operational improvements and investments in guest satisfaction led to positive traffic growth sooner than expected.

• Positive Outlook: Carrols expects strong finishes in Q4 with mid-single-digit same-store sales growth aided by rising traffic.

🧠 EDITOR’S THOUGHTS

Is the fast-food-franchise model okay: So far this year, we’ve seen multiple Burger King franchisees (Premier Kings, Toms King Holdings, Meridian Restaurants) file for bankruptcy, and last week, Starboard group, sought debt protection for 73 of its Wendy’s restaurants.

Follow the leaders: We’ve covered Flynn Group which operates 2,600+ units across Applebee’s, Taco Bell, Panera Bread, Arby’s, Pizza Hut, Wendy’s, and now Planet Fitness brands. Today, we’ve covered Carrol’s which operates 1,000+ Burger King and Popeye’s locations.

What are the franchisee leaders doing right: They have an excellent working relationship with their franchisor partners, they focus on strong business fundamentals, and they are not overleveraged to the tits.

Action Item: If you want to know if your restaurant tenant is operating on thin margins, take a look at their reported financials. If the rent-to-sales ratio is above the 8% industry standard, you should be proactive and consider what could play out. Reply directly to this email if you have any questions or would like some help.

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NET LEASE NUGGIES

• Craveworthy Brands Sets Opening Date for New Budlong Southern Chicken Store in Irving, Texas The Budlong Southern Chicken, a Nashville hot chicken brand known for its flavorful menu, has announced that its new corporate-owned store in Irving, Texas, will open on November 15. (Read More)

• Smalls Sliders Expands with Purple Square Management. Purple Square Management has signed a six-unit deal with emerging burger concept Smalls Sliders in Atlanta. Purple Square CEO Vik Patel was attracted to Smalls Sliders due to its simplicity and drive-thru-only model. The small locations, referred to as "cans," have a small footprint. The addition of Smalls Sliders will add to the 250 franchised units Purple Square operates across several brands in 14 states. (Read More)

• Target beats Street estimates with Q3 earnings as strength in beauty and other "frequency" categories offset weaknesses in discretionary spending. Net income surged over 36% to $971 million, with earnings per share of $2.10, beating analyst forecasts. (Read More)

• Macy’s reports better-than-expected Q3 results as gross margin improvement and merchandise inventory offset declining sales. Macy’s is optimistic about the upcoming holiday season, entering with a healthy inventory position and improvements in gift assortment, promotions, and shopping experience. (Read More)

• Ross Stores beats expectations with strong Q3 performance. The off-price retailer reported net income of $447 million, surpassing analyst estimates, and sales rose to $4.9 billion. Comparable store sales increased by 5%, and operating margin improved to 11.2%. (Read More)

• BJ’s Wholesale Club reports rise in sales and net income. The membership-based warehouse retailer saw net income increase to $130.5 million, with adjusted earnings per share of $0.98, in the latest financial quarter. (Read More)

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