Third Major Franchisee Gives Grim News: Burger Kings Keep Going Up for Sale
Call it a sign of the times, call it Bidenomics in action, but there’s one thing you can definitely call it: a potential economic catastrophe for an untold number of workers.
According to Restaurant Business Online, a major Georgia-based Burger King franchisee filed for Chapter 11 bankruptcy earlier this week, citing major operating losses even after underperforming restaurants were closed.
Premier Kings, which operates 172 Burger Kings in the Alabama and Georgia markets, became the third major Burger King franchisee to file for bankruptcy since the start of the year.
This is despite the fact that the chain, according to the publication, “has shown stronger sales this year while traffic last quarter outperformed its competitors” after initially struggling compared with other fast food giants as pandemic restrictions lifted.
Part of the reason for continued struggles? High labor costs and food inflation were two key issues, although the restaurant has said that smaller franchisees might also be able to better manage individual locations.
Meridian Restaurants and Toms King, two other large Burger King franchisees, declared bankruptcy earlier this year.
In the case of Premier Kings, part of the company’s woes also has to do with the death of owner Patrick Sidhu; his Popeyes franchisee also faced bankruptcy earlier this year in the wake of its owner’s passing.
In Premier Kings case, management brought in investment firm Raymond James & Associates to help market the chain’s franchises and shutter unprofitable locations.
“But those cost cutting measures didn’t work. The company said that it faced pressure from landlords, vendors and with secured lenders,” the outlet reported.
“Premier Kings generated $223 million in sales in 2022 and had an operating loss of $27 million. Bankruptcy court documents also reported $134.5 million in assets and $123.1 million in liabilities.”
Now, several investors are looking to buy some of the company’s franchises — and further closures likely aren’t out of the question.
Of course, this was always an entirely predictable outcome of unmanageable inflation combined with cities and states passing minimum wage requirements that were unrealistic if fast food restaurants were to remain a cheap and viable entryway to low-skilled employment.
Now, even venerable Burger King — where, say what you will about it, you could always count on a cheap meal burger made your way, as the slogan went — is too expensive for many Americans. The same thing could be said about any number of fast-food joints.
As it comes to labor costs, the conservative economist Thomas Sowell put it best: “Unfortunately, the real minimum wage is always zero, regardless of the laws, and that is the wage that many workers receive in the wake of the creation or escalation of a government-mandated minimum wage, because they lose their jobs or fail to find jobs when they enter the labor force.
“Making it illegal to pay less than a given amount does not make a worker’s productivity worth that amount—and, if it is not, that worker is unlikely to be employed,” Sowell added.
And, as for food inflation, like every other form of inflation the root cause is what the president now proudly calls “Bidenomics” — the total mismanagement of an economy by an administration that shouldn’t have been put in charge of, well, a Burger King franchise. This is what you get when a drunken 12-car pileup of bad policies from every alphabet-soup department in Washington is allowed to masquerade as a comprehensive strategy.
No, the Premier Kings bankruptcy isn’t an especially political story, and there’s doubtlessly more to it than meets the eye.
But to say that it hasn’t been shaped by an administration which has failed Americans in every conceivable manner would be equally as stupid.
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Unrealistic minimum wage requirements and failing to address food inflation. Here are three related PAA questions:
Ign. It’s an economic reality that showcases the devastating impact of rising labor costs and food inflation on businesses, particularly in the fast-food industry. Unfortunately, it also highlights the negative consequences of unrealistic minimum wage requirements set by cities and states.
Premier Kings, a prominent Burger King franchisee operating in the Alabama and Georgia markets, recently filed for Chapter 11 bankruptcy. This comes as the third major Burger King franchisee to declare bankruptcy this year, joining the ranks of Meridian Restaurants and Toms King. Despite Burger King as a chain showing stronger sales and outperforming competitors, Premier Kings struggled to overcome significant operating losses.
Labor costs and food inflation were identified as key issues contributing to Premier Kings’ struggles. While the restaurant chain suggested that smaller franchisees might handle individual locations better, the challenges remained. The untimely passing of the owner, Patrick Sidhu, also added to the company’s woes. Premier Kings sought the assistance of investment firm Raymond James & Associates to market franchises and close unprofitable locations, but these cost-cutting measures proved ineffective.
In 2022, Premier Kings reported $223 million in sales but suffered an operating loss of $27 million. The bankruptcy court documents reveal $134.5 million in assets and $123.1 million in liabilities. Consequently, numerous investors are now considering purchasing some of the company’s franchises, potentially leading to further closures.
This situation was foreseeable, given the combination of unmanageable inflation and unrealistic minimum wage requirements. The affordability of fast food, once a reliably inexpensive option for low-skilled employment, has declined. Thomas Sowell, a conservative economist, accurately stated, “Unfortunately, the real minimum wage is always zero, regardless of the laws.” Many workers end up losing their jobs or struggle to find employment when the government mandates a minimum wage that exceeds their productivity.
Furthermore, food inflation, a consequence of overall inflation, is a direct result of what is now referred to as “Bidenomics.” The mismanagement of the economy by the current administration has led to devastating consequences, affecting businesses like Premier Kings. This demonstrates the negative impact of poor policymaking and the consequences of entrusting the economy to an administration ill-equipped for the task.
The Premier Kings bankruptcy is a stark reminder of the challenges businesses face in the current economic climate, particularly in industries heavily reliant on low-skilled labor. It serves as a warning against implementing
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