Burger King invests another $300 million to remodel restaurants

The Burger King logo is displayed at a Burger King fast food restaurant on January 17, 2024 in Burbank, California. Mario Tama | Getty Images

Burger King will invest another $300 million to remodel about 1,100 of its U.S. restaurants as part of a broader turnaround effort, the chain's parent company said Tuesday.

Owner Restaurant Brands International kicked off Burger King's comeback strategy a year and half ago with $250 million to renovate restaurants and upgrade its technology and equipment, plus an additional $150 million to invest in its mobile app and advertising.

In January, the parent company bought Burger King's largest U.S. franchisee, Carrols Restaurant Group, for $1 billion to speed up the remodeling process. The company estimates it will spend an additional $500 million updating 600 Carrols' locations.

Including the investment announced Tuesday, Restaurant Brands is planning to spend around $2.2 billion to revitalize the chain's U.S. business. The company expects 85% to 90% of its roughly 7,000 U.S. restaurants will have the same modern design by 2028.

“It was the first time in a long time that RBI had invested a significant amount of capital back into the business to co-invest with franchisees,” Burger King U.S. President Tom Curtis told CNBC. “I think the process was, 'Let's see how this works'… and we're seeing early results on remodels.”

About 100 Burger King locations have been remodeled and updated so far. Those locations have seen sales climb following their facelifts, according to Curtis.

The latest round of remodels will follow Burger King's new “Sizzle” design, which includes drive-thru pickup for mobile orders and self-order kiosks. Those new features are expected to encourage customers to order even more Whoppers and fries.

Still, Burger King has had to chip in its own money to incentivize franchisees to remodel. Renovations can be costly — especially with high interest rates — and often require the locations to temporarily shutter.

As with the initial round of investment from Restaurant Brands, Burger King franchisees who opt in to remodel their locations will receive cash once construction is completed. Burger King will let operators choose how much of a discount they get on the royalties they pay to the company.

Starting Tuesday, Curtis will be on a roadshow across the U.S. pitching the remodeling strategy to franchisees and starting the sign-up process for the $300 million investment.

Shares of Restaurant Brands were flat in premarket trading on Tuesday after the company reported weaker-than-expected earnings, but its quarterly revenue topped Wall Street estimates. Burger King's same-store sales grew 3.8% in the the first quarter, falling shy of StreetAccount estimates of 4.1%.