Bankrupt Burger King owner sells off dozens of stores after becoming second franchisee to fail under
FAST-FOOD lovers have learned they will lose more locations as Burger King's bankrupt franchisee failed to sell 21 stores.
Meridian Restaurants Unlimited filed for bankruptcy back in March and said that 26 of its 120 Burger King locations were set to close the following month.
The Utah-based company had accrued $14million in debt following a decline in sales and raised costs due to inflation.
By the time of the 10-hour auction last month, Meridian owned 91 locations and has now sold 70 to Burger King and other franchisees for just over $17million, according to QSR.
Burger King bought 32 units from Utah, Montana, and Wyoming for $4.7million.
Meanwhile, franchisee Kansas King purchased 16 locations from Nebraska and Kansas for $2.2million.
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Dakota Restaurant Partners bought 12 locations for $3.4million across Minnesota, Montana, and North Dakota.
Alongside this, Kraf bought seven restaurants in Arizona for $7million and Snake River Foods bought three units in Montana for $632,250.
The remaining 21 units did not have sufficient bids, according to court documents.
Following the auction, the failed franchisee applied for permission to close the remaining stores.
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Burger King has been facing trouble this year with other key franchisee TOMS King Holdings with 90 units also declaring bankruptcy earlier in the year.
The chain is facing an estimated closure of 400 locations this year.
In a bid to reassure investors and fans, Josh Kobza, CEO of Burger King's parent company Restaurant Brands International, noted that the chain has historically shuttered hundreds of locations in the US each year.
"There will always be a minority [of franchisees] who aren't dedicated, enthusiastic operators," Chairman Patrick Doyle said on the call.
"We'll work with them to leave the system."
CEO Josh Kobza admitted said there's a fair degree of uncertainty around the figure of 400 Burger King closures but he added that the brand intends to target low-volume restaurants first.
He noted that for the chain's future franchisees will play a huge role in improving the system in the US as they will all be made to become team players to work with the company to make necessary changes, the CEO said.
He warned: "If they can't, we have operators ready to step in and do what's required."
"We're feeling increasingly positive about the case path forward this year and into the future," the CEO concluded.
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