> Burger King restaurants are independent franchisees but the brand is owned by Restaurant Brands International, based in Ontario, Canada.
While it's true that the headquarters is in Ontario, RBI is majority owned by 3G Capital out of Brazil. They moved the RBI HQ to Ontario ostensibly for tax reasons when they acquired Tim Horton's. Burger King's HQ still appears to be in Miami. So I'm not sure if it's wholly honest to make this seem like a Canadian company doing this, they're just the middle parent of a U.S. HQ > Canada HQ > Brazil HQ ownership chain.
Burger King and Wendy's are attempting to move to a total franchised model. Burger King has managed to dramatically boost their net income by doing this for example, and their market valuation has soared accordingly; so now Wendy's is beginning to chase the same model.
At some point within the next 12 to 24 months, Burger King will be almost entirely franchised.
I think fast food chains are generally not actually owned by the same parent company. A company in India is licensing the Burger King branding and presumably some of the recipes from Burger King USA, rather than being a subsidiary thereof.
This seems like something Burger King can be fixed just by mandating a separate broiler in the franchise agreement, showing off the change, and then neglecting enforcement until someone complains, at which point Burger King can blame the franchisee
Burger King, to take an example, probably doesn't give a crap about the restaurant sales at all.
Most of their profit is from franchise fees, not restaurant sales.
Company restaurant revenues in 2011 were 1638.7 million, and company restaurant expenses in 2011 were 1447.4 million.
All told, profit from restaurant sales was 191 million.
Franchise fee revenue in 2011 was 697 million, franchise and property expenses 97.1 million.
All told, profit from franchise fee revenue was 599.9 million.
Basically, I can't imagine they care if they are franchising restaurants with people, restaurants with robots, or heck, franchising robot boxes themselves.
They only care that someone is paying them to call it burger king, and giving them a cut of sales
I find this comment a bit short sighted. First of all, it's obvious that the burger king org DOES care about restaurant sales, otherwise they would not be advertising constantly. Even if you ignore the contradiction between their actions and your suggestion about their priorities, applying a little logic to the situation will make it clear. If sales aren't good, how many people are going to be making new Burger King franchises? If sales aren't good, will franchises remain in business to pay them fees?
For context, McDonald's Corp buys the land (and building?) for each location. Franchisees then rent those from the McDonald's Corp in addition to their other franchise costs. Not all restaurant franchises work this way, as far as I know.
The real story here is in the nature of the acquisition, a so-called "inversion" that will create a combined Canadian, rather than American, company, which is likely to substantially reduce Burger King's corporate tax liability.
Well up until just a few years ago BK was in near constant fights with its franchise owners. That and changing ownership a few times isn't going to give you a good base to operate from.
There's also the point of view that the franchisees are in the burger flipping business (and employ burger flippers), while Mc Donalds the parent corp are actually in the real estate business. (It's not _entirely_ true, but it's a quite plausible explanation of how their business works...)
How many individual people are buying new franchises these days?
I can't say with certainty, but my impression is that most McDonald's (and other fast food chains, possibly other franchises as well) locations are then owned by semi-regional operators that run a number of franchises. Around here, I know most of the McDonald's are run by 1 corporation. Same with the Burger Kings. It was the same way where I lived previously.
Right. Chains try to maintain at least some amount of stores run by the company to help guide and preserve the brand. Especially in new and high profile markets.
But 3G doesn't need to maintain the brand. The Burger King brand, both to the customer and the franchisee is still decent based upon its historical success. It will take quite a few years for that to trickle down to retail investors and potential franchisees. You have contractual 4.5% royalty of gross and 4.5% for advertising of gross. It does not matter if the franchises make any profit. The IPO paid for the original expenditure, so all BK is left with is debt. Debt which has very little teeth because the majority of assets have already been sold off with some more equity about to be drained out during a debt refinancing. Maybe this is just 3G getting in first on the feeding frenzy of the shrinking fast food, burger joint market, and didn't really change Burger King's path too much, but no one should pretend any of this has to do with running a traditional corporation looking out for its own best interest.
> About 85% of the company in 2016 was represented by franchisee-run locations—people who agree to operate individual McDonald’s restaurants with a licensed privilege to the branding. But rather than collect a lot in royalties or sell its franchisees cooking equipment, McDonald’s makes much of its revenue by buying the physical properties and then leasing them to franchisees, often at large mark-ups.
> Today McDonald’s makes its money on real estate through two methods. Its real estate subsidiary will buy and sell hot properties while also collecting rents on each of its franchised locations. McDonald’s restaurants are in over 100 countries and have probably served over 100 billion hamburgers. There are over 36,000 locations worldwide, of which only 15% are owned and operated by the McDonald’s corporation directly. The rest are franchisee-operated.
As the story goes, McDonalds had a very sophisticated system for finding locations. They were constantly doing geographical analysis, looking at development plans, and so on. Meanwhile Burger King did not. Burger King would look where they were opening a McDonalds and try to place a store nearby.
Eventually Burger King figured out that the McDonalds' locations were generally more prominent and easily accessible than their own. For example, a McDonalds might be convenient to rush hour traffic, while the nearby Burger King was on the wrong side of the freeway or required a U turn to access. They may have also realized that, when given the choice, more people prefer McDonalds. Their copycat approach was hurting sales.
Eventually, Burger King built up their own location-finding capabilities and started locating stores in places where McDonalds was not.
https://apnews.com/article/burger-king-franchisee-carrols-15...
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