Once 3G Capital completes its purchase of Burger King Holdings Inc, the Brazilian-backed investment fund and the fast-food chain’s franchisees may face a $3 billion tab to renovate aging US restaurants.
Last month, Chief Executive Officer John Chidsey told analysts that 85 per cent of Burger King’s 7,200-plus locations in the US need to be remodeled. Modernising stores with the company’s new “20/20” redesign will cost about $500,000 each, he said in June, with some going as high as $1.1 million. That could push the cost past $3 billion.
“The image is 20 years old,” Charles Fallon, president of Burger King’s North American business, said in a telephone interview. “We’re working hard on making the economics work.”
Among Burger King designs still in use is a 1999 layout featuring metal chairs and bright blue booths. That compares with newly remodeled McDonald’s Corp restaurants that showcase low lighting, cushioned stools and bossa nova music played through ceiling speakers.
“McDonald’s is more uplifting,” Joyce Jacaruso Castillo, 69, said upon leaving a revamped three-story McDonald’s on New York’s 6th Avenue. “Burger King is so blah.”
Persuading franchisees to shed that “blah” image may not be easy.