In an unexpected turn of events, Premier Kings Inc., a substantial franchisee of the multinational fast-food chain Burger King Corp., has officially filed for Chapter 11 bankruptcy protection. Hosting a total of 172 units across five states in the Southeast, Premier Kings found itself in this situation after a series of unfortunate incidents.
The Montgomery, Alabama-based franchisee, along with its affiliates, filed the bankruptcy petition on Oct. 26 in the U.S. Bankruptcy Court for the Northern District of Alabama. This move comes after a tragic loss for the company, as its sole manager and owner, Manraj “Patrick” Sidhu, unexpectedly passed away in May 2022.
David Baker, chief restructuring officer of Premier Kings, said the debtors are in an unenviable position, dealing with over 200 creditors. Additionally, they operate 172 Burger King franchise locations throughout Alabama, Florida, Georgia, South Carolina, and Tennessee.
Multiple Bankruptcies Hit Burger King Franchisees in a Tough Year
2022 has proven to be a challenging year for Burger King franchisees, with Premier Kings Inc. becoming the third franchisee to file for bankruptcy. This follows earlier filings from TOMS King Holdings LLC in January and Meridian Restaurants Unlimited LC in March.
Baker indicated in filings that the company and its affiliates operate Burger King or Popeyes restaurants, and other brands, on owned or leased real estate. Ownership has now moved to Joginder Sidhu, the representative for the late Manraj Sidhu’s estate.
Despite reporting over $200 million in sales for 2021 and 2020, Premier Kings saw a downturn in 2022, with sales of $223 million and a net loss of $27 million. Premier Kings, which started with six Burger King restaurants in 2009, employed nearly 3,600 people.
This series of bankruptcies among Burger King franchisees underlines the ongoing challenges in the quick-service restaurant industry.
Future of Burger King’s US Portfolio
Burger King’s parent company, Restaurant Brands International Inc., aims to tidy up its U.S. portfolio by the end of the fourth quarter this year. This plan involves a significant reduction in underperforming units. The goal is clear: kick-start 2024 with a stronger, more effective brand portfolio. Executives announced their strategy earlier this month, demonstrating their resolute determination to weather these challenging times.
Restaurant Brands International Inc., a Toronto-based company with ownership of multiple renowned brands like Tim Hortons, Popeyes Louisiana Kitchen, and Firehouse Subs, recently published its third-quarter earnings. The report, dated Sept. 30, revealed that traffic for Burger King’s U.S. business remained flat throughout this period.
As the fast-food landscape continues to evolve and demand fluctuates, it remains to be seen how this bankruptcy filing will impact the larger Burger King brand and its ambitious plans for portfolio restructuring and growth in 2024.