Burger King shuttering 26 stores over franchise issue

Burger King shuttering 26 stores over franchise issue

Burger King has announced that it is shuttering 26 restaurants and laying off 424 employees in the Detroit area after the corporation failed to reach an agreement with the franchisee operating the locations.

EYM King of Michigan, a corporation based in Irving, Texas, owns the restaurants that will be closing. It informed the Michigan Department of Labor and Economic Opportunity of its failure to reach an agreement with the Burger King Corporation and of the impending layoffs on 22 March. According to reporting from ClickOn Detroit, the store closures began on 17 March and will continue through next month.

Twelve of the restaurants that will be closing are located in Detroit proper, while a number of the other locations are located in the suburbs around the city. Southfield and Livonia will lose multiple locations, as will other Michigan cities like Dearborn Heights and Flint.

EYM King’s website appears to be offline as of Tuesday.

The news of the layoffs and restaurant closures in Michigan comes as Burger King attempts, like many similar brands, to rebound from the effects of the Covid-19 pandemic.

Other nationwide brands like Walmart and FootLocker have also announced store closures in recent weeks, while major food and beverage brands like Starbucks have felt threatened by renewed labour organising efforts in the wake of the pandemic more broadly.

The Burger King closures in Michigan appear to be an one-off issue with a particular franchisee. Almost all Burger King locations are franchised, as opposed to owned outright by parent company Restaurant Brands International, with 86 percent of the corporation’s total revenue reportedly coming from franchise revenue.

According to CNBC, the percentage of revenue coming from franchisees at Restaurant Brands International is higher than any comparator brand. Dunkin’ Brands, Papa John’s, and Popeyes Louisiana Kitchen are other corporations that have over half their total corporate revenue coming from farnchise revenue.