Burger King to overhaul ordering experience at 6,000 US restaurants
Burger King said Tuesday it is investing $300 million to add self-order kiosks to another 1,100 restaurants — meaning more than 6,000 outlets will soon have them.
It is the latest phase of the fast food chain’s drive to revamp its outlets and cut costs – with kiosks potentially leading to fewer staff and lower labor costs.
The announcement came as Burger King reported higher-than-expected U.S. sales in the first three months of the year, indicating that its initial modernization efforts are paying off.
Bosses now says the company plans to have 85 to 90 percent of its 7,000 U.S. points of sale (about 5,950 to 6,300) equipped with the new ordering technology over the next four years.
Late last year, the company had quietly announced that it would roll out the self-service kiosks, but it provided few details and did not provide a number at the time. Today it provided more details.
All new locations will have self-order kiosks, said Tom Curtis, president of Burger King US.
Burger King to invest $300 million to add self-order kiosks to more than 1,000 additional locations
On Tuesday morning, the chain’s owner, Restaurant Brands International, announced it will support the renewal of 1,100 franchise locations by 2028.
Total expenditure on revitalizing the brand is expected to reach $2.2 billion.
So far, about 100 Burger King locations have been updated with the so-called “Sizzle” design to entice customers to buy more Whoppers and fries.
The restaurants, which also offer drive-thru pickup for mobile orders, have seen sales increase following their renovations, Curtis said CNBC.
It comes after franchisees in California said they were already replacing staff with the digital ordering kiosks as a way to cut costs after the state’s minimum wage was raised to $20 an hour.
Harsh Ghai, a major Burger King franchisee with 140 restaurants on the West Coast, said earlier this month that he plans to have digital kiosks in all of his locations within two months.
Until the groundbreaking pay increase, he planned to roll it out over the next five to 10 years.
All new locations will have self-order kiosks, says Tom Curtis, president of Burger King, US and Canada (pictured)
The minimum wage was increased in early April from $15.50 to $20 per hour for employees at chains with more than 60 locations in the US.
Since it came into effect, workers have complained about being paid fewer hours – and some have been fired.
Pizza Hut and Round Table staff have already lost their jobs after bosses said they could not afford the higher wages.
McDonald’s, Chipotle and Starbucks warned they will pass on the extra costs, but Burger King operator Ghai says raising prices risks losing too many customers.
He said he had increased prices by 8 to 10 percent last year, compared to 2 to 3 percent in a normal year.
“Most of that will be absorbed into the inflation of our food costs,” he said Business insider.
“So we’re not even offsetting the majority of the labor costs that we’re going to experience with this legislation.”
Burger King franchisee Harsh Ghai plans to have digital kiosks in all of its 140 restaurants on the West Coast
He added that further price increases will “have a significant impact on our traffic” – so he has found another way to reduce labor costs.
“We have kiosks in probably about 25 percent of our restaurants today,” he told the outlet.
“However, the remaining 75 percent will have kiosks in the next 30 to 60 days.”
Under his previous strategy of rolling out kiosks more slowly — adding them only to new restaurants or those under renovation — it would have taken five to 10 years.
“But now we are continuing to install kiosks in every restaurant in response to the legislation, to be able to offset some of the labor costs that are affecting us,” he added.
Burger King, founded in 1954, said franchisees who choose to remodel their locations will receive money once construction is completed.
According to CNBC, it will let operators choose how much of a cut they get on the royalties they pay to the company.
In 2022, the fast-food chain announced a major renewal initiative, including investing $250 million in renovating locations and upgrading ordering technology
In January, parent company Restaurant Brands bought Burger King’s largest franchisee, Carrols Restaurant Group, for $1 billion.
The company estimates it will also spend $500 million modernizing its 600 U.S. locations.
In addition to investing $250 million in restaurant renovations, the company has also poured another $150 million into its mobile app and advertising.
Burger King admitted it fell behind its main competitors during the Covid-19 pandemic.
Customer numbers dropped, visitors complained about shabby locations that needed major updates and improvements to the complicated ordering experience.
In the first quarter of 2024, same-store sales in the US and Canada grew 3.8 percent.
Self-order kiosks are not a new phenomenon in the major fast food chains – and the rollout received a big boost during the pandemic.
Panera Bread led the way in 2014 by introducing self-service kiosks at all locations, and McDonald’s followed suit in 2017.
By the end of last year, Shake Shack had equipped all of its locations with the technology.