A slew of Utah Burger Kings is set to close as franchisees run into fiscal trouble

A large-scale Burger King franchisee based in Ogden that operates over 100 of the fast-food restaurants across multiple states is set to close dozens of its outlets, including nine in Utah.

Meridian Restaurants Unlimited, which operates 116 Burger Kings, filed for Chapter 11 bankruptcy protections in March but in a court filing earlier this month listed 27 Burger King outlets it plans to close including Utah restaurants in Clearfield, Draper, Heber, Lehi, Salt Lake City, Sandy (two closures) and Saratoga Springs. A complete list of closures, as reported by Meridian in court filings, is posted here.

According to Restaurant Business Magazine, Meridian is also leaving open the possibility of more closures ahead, saying “it is possible, if not likely,” that further analysis suggests more closures are “appropriate.” But the company in a filing said that it doesn’t anticipate closing “all or even a substantial portion of their restaurants.”

In a filing in U.S. Bankruptcy Court for the District of Utah dated April 4, Meridian noted that “over the past several years, and particularly as a result of the COVID-19 pandemic, franchisees systemwide have experienced declining foot traffic.” Meridian said while its businesses “suffered significantly from loss of foot traffic resulting in declining revenue,” costs like rent, debt service and other financial obligations did not see commensurate declines. Meridian also cited the impacts of external pressures on its fiscal health, including recent increases in wages (33% the past few years) and the cost of labor, shipping and food inflation (22% the past two years), according to the court filing.

Meridian said it had sales volumes below the average for Burger King franchises, which reportedly bring in around $1.4 million per year. And while some restaurants were profitable, others were operating at a loss.

Meridian also operates some Black Bear Diner restaurants, though that chain is not mentioned in court filings.

Meridian is one of two large-scale Burger King operators to file for bankruptcy this year while a third closed 26 restaurants in Michigan, according to Restaurant Business Magazine. Burger King franchise operators have struggled with weak sales and weak profitability at a time when costs have soared.

Meridian Restaurants Unlimited could not be reached by phone Monday and did not immediately respond to a Deseret News email seeking comment on the bankruptcy proceeding.

According to a report from The Wall Street Journal last fall, Burger King’s parent company, Toronto-based Restaurant Brands, has installed new executive leadership and earmarked $400 million to boost advertising and revamp everything from restaurant design to the way Burger King’s flagship burgers are constructed.

Executives told The Wall Street Journal that overly complex menus, slow operations and outdated restaurants have tarnished Burger King’s standing with diners and investors.

In 2021, Burger King hired longtime Domino’s Pizza executive Tom Curtis to oversee Burger King’s U.S. business. Curtis has highlighted issues in Burger King’s kitchen operations including challenges with standardization and some menu items, like the Ch’King chicken sandwich, as adding too much complexity for workers, according to the Journal’s report.

Meridian’s announced closures come amid ongoing financial woes for Burger King which held down the No. 2 spot for years when it comes to U.S. sales revenues for fast food chains. It now trails McDonald’s, Wendy’s and Chick-fil-A.

But while Burger King has struggled, other U.S. fast food businesses have been on a tear of late, thanks in large part to inflation-weary customers looking for deals when it comes to their food purchases.

Earlier this year, McDonald’s reported same-store sales grew by over 10% in the last quarter of 2022, the second straight quarter of increased customer traffic at the company’s U.S. stores.

“Overall, the consumer, whether it’s in Europe or in the U.S., is actually holding up better than what we would have probably expected a year ago or six months ago,” CEO Chris Kempczinski said in a January earnings call, per CNBC.

McDonald’s reports plans to open 1,900 new restaurants. More than 400 of those will be in the U.S. and international operated markets, while the rest will be opened by developmental licensees.

Yum Brands, which franchises or operates KFC, Taco Bell, Pizza Hut and Habit Burger restaurants, reported fourth quarter net sales rose 7% over the same time last year. That growth was driven in large part by Taco Bell outlets, the company’s biggest brand, which saw same-store sales grow by 11% in the final quarter of 2022.

The U.S. fast food — or quick service — restaurant sector generated over $330 billion in 2022 according to an estimate from business data website Statista.