Burger King Franchisee Files Chapter 11 Bankruptcy in Akron, OH
Burger King, a well-known fast food chain, has faced its fair share of challenges in recent years. However, the latest blow comes from Akron, Ohio, where one of its franchisees has filed for Chapter 11 bankruptcy protection. This filing has sent shockwaves through the local community and raised concerns about the future of this beloved fast-food establishment.
The franchisee in question is Tom’s King, a company operating multiple Burger King locations in Akron. Tom’s King Holdings, a major Burger King franchisee, recently submitted a bankruptcy petition in response to mounting financial troubles. While the exact reasons for their bankruptcy filing have not been disclosed, speculations point to issues such as increased food costs, availability of labor, and increases in shipping.
Tom’s King Holdings operates 90 Burger King restaurants across 4 states. [1] With this bankruptcy filing, it is uncertain what will happen to these establishments and the employees working at them. The filing will likely affect the franchisee’s credit agreement with Burger King’s parent company, Restaurant Brands International, which might further complicate the situation.
Most of those 90 restaurants are now set to be saved since not one, but four buyers have offered to purchase a total of 82 locations, Restaurant Business Magazine reported. The bankruptcy court has yet to approve the sale, but if it does, the vast majority of the restaurants will be able to continue serving guests under their new owners. [2]
Burger King has struggled for years with weak sales and weak operator profits. Profitability worsened last year as inflation hit many restaurants. The company is working to improve sales and profitability, but many operators continue to struggle, prompting bankruptcy filings. [3]
The Impact on Restaurant Brands International (RBI) & Toms King Holdings LLC.
This bankruptcy filing has significant implications for Restaurant Brands International (RBI), the parent company of Burger King. RBI operates and franchises thousands of Burger King restaurants worldwide and has a vested interest in the success and profitability of its franchisees. The bankruptcy filing by Tom’s King Holdings raises concerns about the overall stability of the Burger King brand and the ability of its franchisees to navigate the challenging restaurant industry landscape.
One of the primary challenges facing Tom’s King Holdings and other Burger King franchisees is increasing labor costs. With the availability of labor becoming more constrained, as evident in Akron, Ohio, it has become increasingly difficult for businesses to attract and retain qualified employees.
This situation puts additional pressure on franchisees to find innovative solutions to manage their labor costs while maintaining quality service for their customers.
Moreover, rising food costs have also impacted the profitability of Burger King franchisees. Fluctuations in commodity prices and increases in shipping fees have made it more challenging for restaurants to maintain profit margins.
The bankruptcy of Burger King in Akron, Ohio, serves as a reminder of the unpredictable nature of the business world and the challenges faced by even well-established companies.
Sources:
[1] E. (2023, January 6). Burger King’s biggest franchisee Toms King files for bankruptcy – EconoTimes. EconoTimes. https://www.econotimes.com/Burger-Kings-biggest-franchisee-Toms-King-files-for-bankruptcy-1648422
[2] Strozewski, Z., & Strozewski, Z. (2023, April 5). 90 Bankrupt Burger King Locations Have Met Their Fate—and Some Are Closing For Good. Eat This Not That. https://www.eatthis.com/toms-king-sells-bankrupt-burger-king-locations/
[3] Maze, J. (2023, April 4). Burger King Toms King is being sold for $33M out of bankruptcy. Restaurant Business. https://www.restaurantbusinessonline.com/financing/burger-king-franchisee-toms-king-being-sold-33m-out-bankruptcy
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