Burger King said Tuesday that it is investing $300 million to add self-service kiosks to another 1,100 restaurants, meaning more than 6,000 stores will have them soon.
It is the latest stage in the fast food chain’s attempt to revamp its establishments and cut costs, with kiosks potentially resulting in fewer staff and lower wage bills.
The announcement came as Burger King reported higher-than-expected U.S. sales in the first three months of the year, suggesting that early efforts to modernize are paying off.
Bosses now says the company plans for 85 to 90 percent of its 7,000 U.S. outlets (about 5,950 to 6,300) to get the new ordering technology over the next four years.
It had quietly announced late last year that it would roll out the self-service kiosks, but did not give many details and did not provide a figure at the time. Today she gave more details.
All of the new locations will have self-service kiosks, said Tom Curtis, president of Burger King US.
Burger King will invest $300 million to add self-service kiosks in more than 1,000 more locations
On Tuesday morning, the chain’s owner, Restaurant Brands International, announced it will support upgrading 1,100 franchise locations by 2028.
Total spending on revitalizing the brand is expected to reach $2.2 billion.
So far, around 100 Burger King locations have been updated with the so-called ‘Sizzle’ design in a bid to get customers to buy more Whoppers and fries.
The restaurants, which also feature drive-thru service for mobile ordering, have seen an increase in sales following their renovations, Curtis said. CNBC.
It comes after franchisees in California said they were already replacing staff with digital ordering kiosks as a way to cut costs after the minimum wage in the state was increased 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 his locations within two months.
Until the revolutionary wage increase, he planned to implement them in the next five to ten years.
All of the new locations will have self-service kiosks, said Tom Curtis, president of Burger King United States and Canada (pictured).
The minimum wage was increased from $15.50 to $20 an hour in early April for workers at chains with more than 60 locations in the United States.
Since it came into effect, workers have already complained that they are receiving fewer hours and some have been fired.
Staff at Pizza Hut and Round Table have already lost their jobs after bosses said they could not pay the higher wage.
McDonald’s, Chipotle and Starbucks have warned they will pass on the extra costs, but Burger King operator Ghai says raising prices risks losing too many customers.
It said that over the past year it had increased prices by 8 to 10 percent, compared to 2 to 3 percent in a normal year.
“Most of that will be absorbed by inflation in our food costs,” he said. Business Insider.
“So we’re not even offsetting most of the labor costs that we’re going to have with this legislation.”
Burger King Franchisee Harsh Ghai Plans to Have Digital Kiosks at All of His 140 West Coast Restaurants
It added that any further price increases “will cause a significant impact on our traffic”, so it has found another way to reduce wage costs.
“Today we have kiosks in probably about 25 percent of our restaurants,” he told the outlet.
“However, the remaining 75 percent will have kiosks in the next 30 to 60 days.”
Under its previous strategy of rolling out kiosks more slowly (adding them only to new restaurants or those undergoing remodeling) it would have taken five to 10 years.
“But now we’re going to go ahead and install kiosks in every restaurant in response to the legislation so we can balance out some of these labor costs that are affecting us,” he added.
Burger King, founded in 1954, said franchisees who choose to remodel their locations will receive funds once construction is complete.
He said it will allow operators to choose how much of a discount they get on the royalties they pay to the company, according to CNBC.
In 2022, the fast food chain announced a major renovation initiative, including a $250 million investment in renovating locations and improving ordering technology.
In January, parent company Restaurant Brands bought Burger King’s largest franchise, Carrols Restaurant Group, for $1 billion.
It estimates it will also spend $500 million upgrading its 600 locations across the United States.
In addition to investing $250 million in restaurant renovations, the company has also invested an additional $150 million in its mobile app and advertising.
Burger King has admitted to falling behind its main competitors during the Covid-19 pandemic.
Customer numbers fell, visitors complained about shabby locations that needed major updates, and improvements to overly complicated ordering experiences.
In the first quarter of 2024, comparable sales in the US and Canada grew 3.8 percent.
Self-service kiosks are not new to major fast food chains, and their implementation gained significant momentum during the pandemic.
Panera Bread led the way in 2014 by introducing self-service kiosks at all of its locations, and in 2017 McDonald’s followed suit.
By the end of last year, Shake Shack had equipped all of its locations with this technology.
