UK Master Franchisees Re-acquires Stores as Part of Growth Plans

As the world entered the new year, Burger King UK, the master franchisee for Burger King here in the UK, announced that 2022 would be a “year of growth”.

The well-known hamburger brand and home of the Whopper entered the UK market in 1974, but didn’t really make a substantial impact until the company was acquired by the London-based Grand Metropolitan in the late 1980s. The hospitality group also bought out UK burger chain Wimpy and took steps to convert most Wimpy stores into Burger Kings in an effort to boost market competition with rivals McDonald’s. At the end of 2021, Burger King UK had approximately 530 locations in the UK, approximately one third of which are directly owned by the company and the remainder owned by franchise partners.

This week Burger King UK confirmed that: it had acquired 74 Burger King restaurants from its second-largest franchise partner, Karali Group, expanding the company’s direct-owned portfolio to 266 restaurants. This means that half of the UK stores are now owned by the company, after the acquisition of 12 restaurants at the turn of the year from franchise companies Kaykem Fast Foods and Saxby. These buybacks are all part of plans to increase market share and increase competition on McDonalds and KFC.

“The acquisition of Karali – the largest consolidation Burger King UK has made – marks a significant milestone for the company, allowing us to own more restaurants, increase value and improve operational efficiencies,” said Burger CEO Alasdair Murdoch. King UK since 2018.

2021 was a year of strong performance for Burger King in the UK, with the brand 68% turnover increase to £211.7million, with comparable store sales up 46% and also operating profit of £33.4million for the year. This was an impressive turnaround from the previous year when the brand reported a loss of £7.5m, blaming the impact of the Covid-19 pandemic and challenging trading conditions.

The growth plans revealed by CEO Alasdair Murdoch are certainly ambitious. The plan is to open 200 more stores by 2026, with delivery and Drive-Thru being key parts of the expansion plans.

“Both delivery and Drive Thru sales were strong in 2021 and will continue to be key areas of focus as we execute on our growth strategy,” said Murdoch. “We have a strong development pipeline to further increase our footprint in the UK, and we are very well positioned to take advantage of the clear market opportunities ahead.”

The brand is also leveraging technology to support its growth and is launching a new customer loyalty program in the UK through the My Burger King app, providing personalized, digitally-led offers to increase customer engagement. It plans to renovate many of its restaurants and introduce digital kiosks for pre-ordering, along with digital menu screens. And to continue the trend of innovation, the flagship Leicester Square branch reopened in the spring after a complete redesign and launched with a 100% meat-free menu for the first month of reopeningg. This was a trial to gauge the popularity of the plant-based offering, and the Vegan Royale, Vegan Nuggets and Plant-based Whopper will now remain standard on the menu in all restaurants, with more vegan food items to follow. The brand apparently has set itself the goal of being 50% meat-free by 2030.

Strong demand for fast food and home delivery services fueled by the pandemic appears to be an ongoing trend, although the increased number of online ordering platforms and apps certainly makes it a competitive marketplace to operate within. That, coupled with the threat of a recession in the UK, means that Burger King UK undoubtedly faces challenges on the road ahead. However, it will hope that the refurbishment and upgrade program, innovations in both technology and menu offerings, and the improved operational efficiencies achieved through stores’ buyback strategy will help turn its growth plans into a huge success.