Burger King GOING BANKRUPT! (ripoff)

In this video, I'm going to talk about Burger King and why I think they're going to go bankrupt if they don't change something soon. I'm also going to talk about which industries are ripe for being able to exploit and take over. I'm also going to talk about franchising and how places like Burger King could be an absolute ripoff. Let's jump into it, starting off with this article From Restaurant Business Online.com A Big Burger King Franchisee Declares Bankruptcy Tom's King holdings, which operates 90 locations in Illinois, Ohio, Pennsylvania and Virginia, blame the pandemic for hurting traffic and inflation for draining cash flow all right, Tom's Holdings, a 90 unit Burger King operator with locations in four states, declared bankruptcy this week, blaming the pandemic and subsequent inflation challenges for draining its cash flow and making it unable to pay its debt. The company is one of the burger chains largest franchisees and operates locations in Illinois, Ohio, Pennsylvania and Virginia. It filed for Chapter 11 bankruptcy protection with $35.5 million in secured debt and another $14 million in unsecured obligations, according to court documents. Tom's plans to sell its restaurants through the bankruptcy process. I honestly believe that that $14 million in unsecured obligations is the thing that killed them. That's probably in a variable interest rate and has probably doubled in the cost as interest rates have gone up. This is again why debt is very, very hurtful in a time of a recession. Tom's in court filings said that its business suffered significantly from a lot less foot traffic, resulting in declining revenue without proportionate decreases in rental obligations, debt service and other liabilities. The company then noted that higher costs for shipping and food, a lack of labor and overall inflation exacerbated its problems with cash flow. While some of Tom's restaurants are profitable, the company said, others are losing money, making it unable to make its debt payments. Toms started working with his lenders and its franchisor to restructure. Last year, the company hired a restructuring advisor that ultimately recommended filing for bankruptcy. The company appointed R.J. durie, the former CEO of the bakery cafe chain Cozy, to be an independent manager of the business. It also appointed Daniel Dooley, CEO of the consulting firm Morris Anderson, to be its chief restructuring officer. The bankruptcy trust me, I'm going to use all this in just a second. The bankruptcy filing showed a challenging period for Burger King in general. The chains sales struggled going into the pandemic and didn't recover in 2020 and 2021, even as competitors like McDonald's and Wendy's reported strong sales. Some key marketing efforts also failed, such as its 2021 introduction of a hand breaded chicken sandwich. While Burger King has overhauled management and its parent company is investing $400 million into its brand revitalization. The the combination of weak sales and soaring food and labor costs hurt chains operators. Credit rating agencies downgraded multiple Burger King operators last year over such challenges. In a late statement, Burger King suggested that the restaurants will be sold to existing franchisees over the next year or so. We anticipate a few franchisees will leave the system and we will proactively manage those transitions. The company said the restaurants will ultimately be owned by high performing franchisees and other proven operators and in the restaurant industry. Okay, so here's my deal. I think that the old Burger King will go BK bankrupt, not Burger King. They will go bk. If they don't figure out something in the next five years, I feel like their brand is in turmoil. And these are the type of industries that I love. These are the type of industries that the only way that they innovate is through marketing campaigns. And if you. Look, let me show you this. So, so if we jump over here to the list of Burger King marketing campaigns over the past 30, 40, 50 years, literally these are all a ton of different campaigns. This is how they stayed alive. This is how they stayed relevant is they had all these slogans and campaigns and right now, right now, this is the one, it's called you rule. That is the current marketing slogan that they are known for and that they are trying to promote. Is this you rule thing. Okay, so let's look at this what this you rule it really entails. Okay, let's jump into this thing. Okay, so Burger King is launching a brand new positioning and campaign. Recenters the brand around its classic have it your way messaging while celebrating guests individuality and everyday wins per information shared with marketing drive. The repositioning kicks off the Euro campaign which debuts October 10, is a couple months old and puts the chain's promise of customization front and center. Okay, so this is the thing. When an industry, or more importantly a business, starts to only differentiate themselves based on marketing campaigns, you realize that they've lost focus on the customer and the product because those are the only thing two things that in the long run will lead to a great outcome. You can market till you're blue in the face, but if the product stinks and if no one likes coming to your stores because they're dirty and your technology is way behind that of your competition no one is going to care. And so what customer cares about is the customer experience. They care about the product. And if you're not investing in those two things and you're only investing in trying to sell your B rated product, you're not going to survive very long. You'll be good. In short terms, you might have a great marketing campaign, have a little bump, you might get some rapper or some celebrity to endorse a product, a burger, make a new one and it pops off for a little bit. But now you're just in this ever ending cycle of constantly trying to just make a new marketing campaign. I personally don't feel like innovation in marketing is a long term solution. For a business to do well, I feel like you have to innovate on the customer experience or on the product. If those two things are not changed up, eventually your business dies. In the same time that Burger King is doing this, you look at McDonald's and what they've done to increase their throughput on their drive through and the technology they're now using in terms of not needing cashiers and even some of the robots, they're using the back end in terms of like making burgers and things. They're investing into the product and the customer experience. Two things that Burger King has failed to do and instead they've just been focused on marketing and the next campaign and the next. And literally we're looking at what, 40, 50, 60 campaigns they've done over the course of the past, you know, few decades. It's incredible. And that's why there's no pattern, pattern recognition or brand symmetry, because it keeps changing and it just, we're just hopping from one thing to the next to the next. And it makes you look desperate, it makes you look like, hey, we don't have a great product, we don't have a great customer experience. We can't compete with our competitors on technology or anything to do with our stores because we're way behind them. So we'll just like make these like little spoofs of market. It makes you look cheap, it makes you look stupid. There's a reason why Tesla doesn't spend money on advertisements and, and marketing is because they have a great product and they just focus all of their time, money and energy on building a better product and making a great customer experience. So you can do over there over the air updates to your self driving vehicle. And people love it. That's what they love. They don't necessarily need to see a flashy super bowl commercial. That's not what in the long term is going to help the business in the short term always leads to great pr, great sales in the short term. But a great product and a great customer experience is the only thing that matters. And that leads me to the next thing. And that is. That's why I choose lawn care. Because there's been no real innovation for decades. The people who have won are the ones that simply can sell and do great marketing campaigns and manage people. There's been not a lot of product innovation or customer experience innovation for a long time outside of slight innovations in terms of like CRMs, being able to use credit cards online, track your team members when they are driving out in the field little features like that. Great. But there's been really nothing that's completely revolutionized the industry. And what's going to happen to an industry that does that is that.

650,000 operators and landscape companies in the United states will become 200,000 when a technology comes along and eliminates the need for so many of them and consolidates an industry. This happens all the time. It's happened in retail with Amazon and online e commerce. It happens in every industry that has been sitting around for decades, sitting on their hands, not focused on the product or the customer. Now, this is my thought on Burger King. They're going to go bankrupt if they don't change something in the next five years. Because eventually it'll catch up with them if they don't invest in the right things and they keep investing in stupid things like, you rule. Like, okay, are you. They probably spent millions of dollars coming up with that. It's ridiculous. They're going to go bankrupt. Number two, these are the type of industries that you want to take advantage of and then you can exploit. Number three, these are the type of franchisors that you should avoid at all costs. Burger King is simply a franchisor. Let's check this out. Okay, I'm gonna do this live, so I'm gonna pull up. This is Augusta Lawn Care. By the way, we just got ranked 460th in the top 500 franchises in America. Let's go. Thank you, Entrepreneur Magazine. I appreciate it. You can go check this out. But what I was really looking for is franchise 500. Because if you go to the franchise 500. Check this out.

As much as I am so happy that we are on this list, it's kind of a nice little thing that we got on the top 500 list. Europe with here, with all these great companies like Taco Bell and all the Rest of it on this list, the number 23 is Burger King. And that's why these sort of metrics I don't really care about. I don't care about what Entrepreneur magazine thinks about me, because I look at Burger King and I think it's a failing franchisor. Here's why. When you look at a franchise or like this, the ROI of your money is so low. Check this out. Okay, let's assume that we're profitable. But to build that Burger King is going to cost you $3 million. If you make $300,000 in profit, it's going to take you 10, 10 years to recoup the cost of your initial capital outlay. And so this is why these companies have massive amounts of debt and they become a real estate play. And like they mentioned, it's because of the rent and their costs going up that they can't make their debt obligations. But you got a place like Burger King, you got places like Taco Bell, these other companies. It costs 2, 3, 4 million dollars to get a store up and running. And if you're good, if you're great, like the average store sales of Burger King right Now is like $1.4 million. If you are 20% profitable, that's $280,000 per year in profit. And you put spent $3 million to build out your store, it's going to take you 10 years to recoup the cost of just getting your store up and running. That is insanity. There is no reason to join a franchisor for a 10% return on capital. It's atrocious. You should just invest your money in the stock market or better yet, just go buy the real estate so that you can go rent out to the next franchisee that's getting a 10% return on money. You can get 10% just on owning the real estate. Furthermore, these type of legacy brands like Burger King, they sell these franchises because people do believe that they're going to be safe investments because it's a known brand that only lasts for so long. Just because they see super bowl commercials and ads on in between NFL games for Burger King, you're like, oh, that must be a great brand. It's a safe investment. I have $10 million. I'm going to go invest into Burger King and I'm going to get three or four stores because that's a safe investment. This is, this is the rude awakening we're seeing. Their biggest franchisee with 90 locations is going BK at the BK. And I think this is going to be a trend that continues on with franchisors that have a legacy brand that have become very sloppy because with a franchise, hey, I'm a franchisor. Let me tell you the behind the scenes. The reason franchisors typically go out of business in 30 or 40 years is because they get sloppy and they get lazy with the fact that they get royalties based upon top line revenue. You know how you get a quick injection of capital as a franchisor is have a market campaign that does a bunch of top line revenue so that you get initial a bunch of that capital because you get like 5%, 6% of revenue. Guess what? If I can just pump some money into marketing, spend a million dollars and get $10 million back in royalties from all my franchisees, that's a great investment. And I have no longer invested in the 30, 40 year outlay of my franchise. I'm only concerned about the next five or 10 years. Why the current franchise agreements are signed and I just need to make sure I extrapolate as much cash as possible in that amount of time. Short term thinking leads to bad long term results for a business like you cannot run away from this. And franchisors like Burger King that have become massive are simply living off of their brand awareness. And that's the only thing driving them forward. Cause they're not innovating on the product, they're not innovating on the customer experience. And ultimately they will fail without some massive disruption coming along. Just my opinion.