Aroostook County's only 3 Burger Kings give up their thrones
Courtesy / RBI
An investor presentation from last May outlined elements of the larger, technology-enhanced "Burger King of the Future" restaurants, which are opening as small branches close in increasing numbers.
All three Burger King restaurants in Aroostook County on Saturday abruptly closed operations in an apparent result of poor financial performance — although the reason for pulling the plug may be more complicated than that.
The fast-food restaurants in Caribou, Houlton and Presque Isle were shuttered and a notice posted at the entrance of each eatery by Steve Wegner, of Bangor-based Northcountry LLC. Wegner holds the franchises for the three along with Burger King branches in Bangor, Ellsworth, Orono and Rockland.
In the Feb. 1 notices, also widely shared in social media, Wegner wrote that he decided to close the Caribou, Houlton and Presque Isle restaurants “with extreme regret.”
“While I’ve truly enjoyed owning and operating this restaurant for the last several years, challenging sales volumes and diminished profits over the last few years have made it unsustainable,” read each notice.
“All current employees will be offered positions in any of my other Burger King locations.”
It's likely that over 50 employees are affected, based on industry average per-store employment. Calls to Wegner for more information were not immediately returned.
The closures drop the number of Burger King restaurants in Maine to 31, out of about 7,500 in the U.S. and over 18,000 worldwide.
But Burger King, owned by Toronto-based Restaurant Brands International Inc. (TSX: QSR) is trying to grow those numbers. One of the ways, ironically, is by shutting down smaller, less profitable branches.
Burger King told analysts in May 2019 that it planned to double the number of its U.S. restaurant closures over the next couple of years, from the current level of 100 to 130 annually to 200 to 250. At the same time, the company is aggressively launching larger, technology-enhanced "Burger King of the Future" stores that more than offset the closures.
Bottom-line benefit, local loss
According to a Burger King presentation, in 2018 the net number of U.S. locations increased by 104, up from just five in 2015 and the most in two decades. The restaurants that closed in 2018 had average annual sales of $1 million, while the new locations averaged $1.5 million.
“Ultimately this is a very good for the system,” said Chris Finazzo, president of Burger King in the Americas. “Closing low-volume restaurants creates a virtuous cycle where improved franchisee profitability leads to further reinvestment in new stores and remodels.”
Burger King has been closing the stores by not renewing their franchise agreements as they expire. Nearly all U.S. eateries are owned by franchisees, who typically pay $50,000 for a 20-year contract as well as 8.5% of gross sales for royalty and advertising expenses.
Without clarification from Wegner, Mainebiz can’t say if franchise expiration was a factor in Saturday’s closures.
Wegner has operated Burger King restaurants since 1980, and in 2015 closed a franchise he ran in Calais after filing for Chapter 11 bankruptcy, according to the Calais Advertiser. Washington County remains without a single Burger King franchise.
Now Aroostook has met the same fate.
While the three communities are each home to other fast-food restaurants, locals searching for a Whopper — or employees looking for a new position — may have to travel to Wegner's Burger King in Orono, the next-nearest location but over 100 miles from Houlton.
Another recent Burger King closure occurred in 2018 in Salem, N.H. However, Burger King operates a half dozen other branches within 10 miles of that former one.
In the fast-food industry, geography can make or break a business. McDonald's Corp., Burger King's larger competitor with about 60 restaurants in Maine, shuttered one of them in Yarmouth over five years ago. Meanwhile, a McDonald's just 6 miles north in Freeport has been operating since the 1980s, and one 7 miles to the south in Falmouth underwent a major upgrade and expansion last year.
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