Burger King UK has secured £35m in new investment from Bridgepoint, while confirming plans to add over 60 restaurants over the next two years.
The master franchise business reported total revenues were up 39% to £294.5m in 2022 and like-for-like sales growth of 11% – outperforming the wider Quick Service Restaurant (QSR) market.
During the period, BKUK opened 32 new company-restaurants and acquired 74 from the largest franchise partner, Karali Group.
The Alasdair Murdoch-led business reported strong progress in its remodelling programme, with 32 restaurants upgraded in 2022, including Leicester Square flagship, and a further 10 to be completed by the end of 2023, including Manchester Piccadilly and Thorpe Park.
An additional £35m of funding has been secured in 2023 to support its restaurant growth strategy and investment into its existing estate.
The company has also made progress on its ‘Burger King for Good’ ESG strategy – including a 25% decrease in Scope 1 and 2 emissions and commitment to remove all plastic lids for dine-in transactions saving over 30 tonnes of plastic a year.
Alasdair Murdoch, CEO of Burger King UK, said: “I am pleased to announce a resilient full year performance and strong strategic progress in 2022 as we announce ambitious plans to open 60 new restaurants over the next two years. We have continued our rapid expansion in the UK and delivered good growth during the year, despite industry-wide headwinds.
“Alongside new restaurant openings and the acquisition of our largest franchise partner, Karali Group, we continued our strategic focus on growing digital sales including home delivery and the introduction of our loyalty scheme on the Burger King app. We also continued to invest in our customer proposition – our remodelling programme is well underway with 42 restaurants being upgraded during 2022 and 2023, and we are progressing our menu innovation to cater to all preferences.
“Looking ahead we see significant opportunity for further growth and are encouraged by the strong pipeline of new openings, supported by additional funding from Bridgepoint.”
Despite a challenging market environment, Burger King UK delivered robust growth throughout the year, leveraging new store openings and acquisitions to progress rapid expansion across the UK. Underlying EBITDA of £15.2m was down versus 2021 (£33.1m), with margins impacted by the significant rise in food inflation during 2022 as well as higher utility prices.
The group is encouraged by early signs of margin improvement into 2023, as the rate of food cost inflation falls, with margin recovery also underpinned by an increasing focus on cost discipline.
An operating loss for the year of £20.6m (2021: profit of £33.5m) is attributed to non-recurring costs and includes those associated with the acquisition of Karali, in addition to one-off, non-cash impairments on leases and goodwill linked to the challenging market environment.
Restaurant portfolio and openings
Burger King UK added 106 new owned restaurants to its portfolio during 2022, with the opening of 32 new restaurants across the UK and the acquisition of all 74 Burger King restaurants from its largest franchise partner, Karali Group, following its acquisition in September 2022.
The Karali acquisition marked the largest consolidation Burger King UK has made, an important milestone in its strategy to bring more of the business under its ownership, enhance value and drive operational efficiency.
During 2023, the Group agreed an additional £35 million of funding from its shareholder, Bridgepoint, which will support continued expansion of the company through the opening of new restaurants and investment in the existing estate.
In addition to new openings, Burger King UK’s remodelling programme continued during the year, with the upgrade of 32 restaurants in 2022, including over £1m invested to transform the flagship Leicester Square restaurant, driving double-digit sales growth. This forms part of its strategy to energise its restaurant portfolio, deliver an improved customer experience and a new visual identity, including pre-order digital kiosks and digital menu screens.
Evolving customer proposition
Burger King UK continued to focus on the diversification of its customer proposition and has taken steps to suit evolving customer demands, for example through its remodelling programme and partnerships with home delivery operators; the creation of pre-order kiosks to provide digital ordering; and the introduction of plant-based options to cater to all preferences.
Burger King UK also continued to invest in digital transformation alongside its customer offering, with the launch of its UK-wide loyalty scheme within the Burger King UK app. The scheme’s personalised and digitally led offers have driven strong customer engagement, with over two million users of the Burger King UK app, helping to drive growth in Click and Collect services.
Alongside this, the business continued to expand its home delivery offering through partnerships and new agreements with major home delivery operators, including Deliveroo, Just Eat and Uber Eats. Digital sales, which includes home delivery and click and collect, now represent an important and significant sales channel.
Burger King for Good
The Group has progressed its active approach to ESG through Burger King UK’s responsible business strategy, ‘Burger King for Good’. With a focus on managing its business and supply chain sustainably, the Group has continued its aim to achieve 100% independently certified sustainable sourcing across all key commodities by 2030. The Group committed to remove all plastic lids for dine-in transactions from October 2022, saving over 30 tonnes of plastic a year. Burger King UK has a science-based target to reduce absolute Scope 1 and 2 greenhouse gas emissions by 100% by 2030 and delivered a 25% decrease of these emissions in 2022.
