Burger King 2023 Closures

mburb1981
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Burger King 2023 Closures

Post by mburb1981 »

https://www.clickondetroit.com/news/loc ... f-layoffs/

In this shocking development, the franchise owning these 26 locations, EYM King of Michigan, has failed to reach an operating agreement with Burger King Corporation and is now ceasing operations entirely. Locations began closing on March 17 and the last will close by April 15.

This will leave only four BKs within Detroit proper - Van Dyke & Outer Drive, Vernor & Livernois, Lafayette & Trumbull, and the one in the RenCen food court (surprisingly).
Last edited by mburb1981 on May 5th, 2023, 1:18 pm, edited 1 time in total.
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Re: Burger King to close 26 southeast Michigan locations including 12 in Detroit, 2 in Flint

Post by Super S »

Burger King seems to have a lot of issues with some of their larger franchise operators. In the early 2000s, they had a couple rounds of closures in the Seattle area. Some eventually reopened, but not all.
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Re: Burger King to close 26 southeast Michigan locations including 12 in Detroit, 2 in Flint

Post by storewanderer »

EYM seems to run various other concepts including Panera, KFC, Pizza Hut, and others.

They seem to be out of TX and have 100+ locations under other concepts in other states. This does appear to remove them entirely from MI.
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Re: Burger King to close 26 southeast Michigan locations including 12 in Detroit, 2 in Flint

Post by Romr123 »

Carrols is one of the other franchisees in metro Detroit--they're reasonably well capitalized and have multiple hundred locations of BK and Popeyes.
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Re: Burger King to close 26 southeast Michigan locations including 12 in Detroit, 2 in Flint

Post by storewanderer »

These MI locations closing seem to be a mix some new builds, some really old barely updated 70's or 80's locations, multiple with the entire front counter enclosed, etc. These do not look like high volume units. I would expect some of the newer ones to reopen under a different franchisee.

However it is strange the block of locations is closing as opposed to simply transferring ownership to a different franchisee on the locations that could be sold.
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Re: Burger King to close 26 southeast Michigan locations including 12 in Detroit, 2 in Flint

Post by Romr123 »

Burger King has always been weird in Detroit...LaVan Hawkins was tied up with them 20 years ago which adds another layer of weird. https://www.freep.com/story/news/local/ ... 422289002/
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Re: Burger King to close 26 southeast Michigan locations including 12 in Detroit, 2 in Flint

Post by BillyGr »

Romr123 wrote: March 29th, 2023, 10:58 pm Carrols is one of the other franchisees in metro Detroit--they're reasonably well capitalized and have multiple hundred locations of BK and Popeyes.
Though they have closed quite a few locations as well, like here in NY State where they are the major franchisee, over the past decade or more, while not opening anything new.
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Re: Burger King to close 26 southeast Michigan locations including 12 in Detroit, 2 in Flint

Post by storewanderer »

I recall hearing a number of years ago in like 2008 that Carrols was on the verge of bankruptcy.

Carrols had a difficult 2022.
In early 2022 this came out:
https://www.restaurantbusinessonline.co ... ut-bonuses

Still they managed to make it through 2022 and last month they released earnings and they had a loss but there were some positives in the report.

Their stock may be an interesting proposition. I think they have too much exposure to the Burger King brand. It is too bad they can't do something to decrease the number of Burger King units and increase the number of Popeyes units.
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Re: Burger King to close 26 southeast Michigan locations including 12 in Detroit, 2 in Flint

Post by Bagels »

At least half the franchisee's locations -- pretty much the ones in Detroit and Flint proper -- are losing money. We know this because the franchisee defaulted on its payment obligations to BK, resulting in an ongoing lawsuit. These locations are clearly low volume -- low employee counts & aging/ neglected facilities. The franchisee does have some plum locations, but looks like BK forced them to close. From a quick Google search, it looks like the franchisee acquired these location directly from BK roughly a decade ago in a sweetheart deal. Probably paid little or nothing for the Detroit locations + the rights to acquire the plum locations.

Detroit (and Flint) is extremely poor. Nearly all of the McD's that have permanently closed in SE Michigan over the past two decades are in Detroit (including Highland Park and Hamtramck). About the only places that do well are Coney Islands (re: cheap), fish fry and chicken joints (and it's the truth, not a stereotype). Some years ago, I worked with a McDonald's operator and the only reason his Detroit locations survived was because of a Federal tax credit geared toward low income areas that provided X dollars for every employee hired and retained. Basically, he'd hire people, and as long as they clocked in just one time he'd insist he was eligible for the full credit -- which was based on longevity/ retention rather than wages paid -- because he didn't fire them / they still had jobs... even if they walked off minutes into their shift. Shady.

It was about a decade ago that plans were made to allow food stamps to be used at restaurants, which probably factored into the decision to acquire these. Michigan didn't adapt such policy until a couple years ago, and it probably didn't work out they way the franchisee hoped.

Alas, probably half the locations will re-open under a new operator. Unfortunately, conservative media has taken this story, taken it out of context and played the politics game. (E.g. "Liberals, high crime and minimum wage lead to BK closures.")
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Re: Burger King to close 26 southeast Michigan locations including 12 in Detroit, 2 in Flint

Post by storewanderer »

Nothing political about these closures. These are a concept that seems to have some issues with performance, and a block of 26 locations in slow/no growth type of areas. Enough of the locations appear to need major renovations to get up to current brand standards that it may just be an economic thing with this block of locations. This block of locations is not viable. But some pieces of the block are viable and it will be broken out (evidently under some other franchisee).

I am surprised Burger King Corporate held even some of these locations previously though. I wonder if a previous franchisee went under, Burger King Corporate stepped in and assumed the block of locations, then transferred it to this franchisee.

I wonder what tax credit that was. Or if it was Federal or State. Empowerment Zone Credit is based on percent of wages and needs 90 days of employment.

Food stamp acceptance (cash part) in CA fast food restaurants is interesting. I see restaurant level marketing surrounding it in SoCal and the payment terminals present in many units. But in NorCal there is zero marketing (even in rural areas) and I am not even sure if most fast foods accept it up in the Northern part of the state. This seems to be a franchisee by franchisee thing. I don't think this has been a huge sales generating program for fast food.
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