Consolidated Burger Holdings, Burger King’s largest franchisee operating 57 locations primarily across Florida and Georgia including 53 traditional standalone restaurants and four outlets within Walmart stores filed for Chapter 11 bankruptcy protection on April 14, 2025, in the U.S. Bankruptcy Court for the Northern District of Florida. This move, listing assets and liabilities each between $50 million and $100 million, demonstrates the relentless economic pressures that keep cycling through the fast-food giant’s system, exacerbated by post-COVID revenue declines, escalating operating expenses, and a highly leveraged balance sheet that depleted liquidity over recent years.
It is a symptom of broader industry pressures such as persistent inflation, reduced foot traffic, and fierce competition from rivals like McDonald’s and internal dilemmas, including costly legal disputes with Burger King Corporation over franchise agreements and remodel obligations dating back to 2019, which culminated in a settlement in September 2024 but failed to avert financial distress. Despite achieving “top-tier” operational metrics within the Burger King system, the franchisee reported $67 million in fiscal year 2024 revenue alongside a $12.5 million net operating loss, underscoring the challenges in recovering pre-pandemic profitability amid defaults on rental agreements and debt service.
This filing marks a significant milestone for the chain as it sets off on an ambitious turnaround campaign, backed by $1.6 million in debtor-in-possession financing from creditor Auxilior Capital Partners, to facilitate a court-supervised sale of assets and regain its competitive position in an acutely competitive marketplace dominated by value-driven promotions and shifting consumer preferences.
Financial Condition of Consolidated Burger Holdings
April 14, 2025, saw Destin, Florida-based Consolidated Burger Holdings file for Chapter 11 bankruptcy before the U.S. Bankruptcy Court for the Northern District of Florida. The franchise has 57 Burger King restaurants in Valdosta, Georgia, and Florida markets like Tallahassee, West Palm Beach, and Naples, including four within Walmart stores. In 2024, it recorded $67 million in revenues despite an operating loss of $12.5 million, a decline from 2023’s $76.6 million revenues and $6.3 million loss, a deepening financial crisis driven by shrinking revenues and constant fixed costs.
- Company entered bankruptcy with $78 million in assets and liabilities.
- Total debt amounted to $36.6 million.
- $14 million in secured debt.
- $21 million in unsecured debt.
- Available cash was only $179,000, indicating severe liquidity issues.
- Received $1.6 million in Debtor-in-Possession financing from Auxilior Capital Partners.
- Financing aimed to support business operations during restructuring.
These financial challenges are the larger pressures faced by franchisees in the fast-food sector. Consolidated Burger’s declining sales and rising losses emphasize the struggle of matching costs of operation with diminishing revenue streams. The diversified base of the franchisee, comprised of high-traffic Walmart stores, was not enough to counteract financial decline, which emphasizes the need for strategic efforts to stabilize operations.
External Pressures Affecting Operations
The COVID-19 pandemic took a harsh toll on Consolidated Burger, with diminished traffic leading to drastic declines in revenue. Fixed costs such as rent and debt repayment did not vary, resulting in a financial squeeze. Inflation and higher food prices only further eroded the profitability margin, with it being challenging to maintain cash flow despite restaurant renovations since 2018, including new HVAC systems and parking lots.
- Labor shortages increased operational costs and challenged service quality.
- Consolidated Burger struggled with hiring and retaining workers.
- Labor issues were widespread across the fast-food industry.
- Economic instability compounded the franchisee’s financial pressures.
- Labor and economic challenges limited adaptability to changing market conditions.
Legal disputes with the parent of Burger King since 2019, settled in September 2024, contributed to pressures on operations. A default notice in February 2025, the enforcement of which was stayed through the filing, created further pressure on the franchisee. With its “top-tier” performance rating for operating metrics within the Burger King system, these external and internal pressures pushed Consolidated Burger into bankruptcy as a means to reorganize and become stable.
Strategic Response to Bankruptcy
Consolidated Burger aims to keep all 57 restaurants open through bankruptcy proceedings and actively seek buyers of its business and assets. After a seven-month search for 235 prospective acquirers with no solid offer, the franchise divided its restaurants into two firms Consolidated Burger A (39 restaurants) and Consolidated Burger B (18 restaurants) to facilitate sales. The restructuring is meant to enhance the appeal of the business to potential buyers and provide continuity in service.
- Franchisee’s strategy is a practical response to impending financial difficulties.
- Secured Debtor-in-Possession financing to provide immediate liquidity for working capital.
- Funds specifically allocated to cover payroll and supplier payments.
- Enables focus on planning a sustainable future, such as through sale or liquidation if needed.
- Emphasizes the role of flexibility in navigating a challenging market environment.
The bankruptcy filing identifies the need for aggressive financial planning in the fast-food business. Consolidated Burger’s effort to maintain its restaurants operating throughout a sale process identifies a commitment to job maintenance and customer service. The inability to locate a buyer despite extensive advertising, however, suggests broader market skepticism towards the viability of large franchise operations in the current economic environment.
Burger King’s Competitive Struggles
Burger King’s franchise model has also taken a blow, with Consolidated Burger’s filing being the largest operator bankruptcy in recent times. Other big franchisees, including TOMS King Holdings (90 restaurants) and Meridian Restaurants Unlimited (120 restaurants) early in 2023, and Premier Kings (172 restaurants) towards the end of that year, also filed for bankruptcy, citing declining revenues and high indebtedness. Meridian sold the majority of its restaurants, 32 of them being purchased by Burger King corporate for $4.7 million, which shows system-wide distress.
- In 2020, the chain fell to the position of the nation’s second-largest burger chain behind Wendy’s.
- Experienced a slump due to lagging traffic and sales compared to competitors’ recovery to pre-pandemic levels.
- Lower average unit volumes contributed to the decline.
- Burger King restaurants generate less than half the per-store sales of McDonald’s.
- Per-store sales are approximately $500,000 less than Wendy’s.
- Operating and fiscal inefficiencies exposed the chain to vulnerabilities in shifting market conditions.
The first quarter of 2025 registered a record number of U.S. company bankruptcies since 2010, increasing risks for franchisees such as Consolidated Burger. Volatility in the economy, shifting consumer behavior, and high competition are creating tough conditions. Burger King’s troubles are part of a larger industry pattern where operators need to deal with escalating costs and shifting customer tastes to stay afloat.
Turnaround Strategy: Reclaim the Flame
Burger King’s “Reclaim the Flame” multi-year, $400 million program aims to revitalize the brand via improved operations, brand position, and revenue growth. Global same-store sales rose 12.3% in early 2023, with U.S. sales up 8.7%, ahead of expectations. Same-store sales rose 1.5% by Q4 2024, to help deliver a full-year rise of 1.2%, following a rise of 7.5% in 2023, which indicates incremental progress in a challenging environment.
- The chain plans to close approximately 400 low-volume restaurants in 2023 to enhance overall system health, as stated by Restaurant Brands International CEO Josh Kobza.
- Burger King is encouraging underperforming franchisees to sell their operations to stronger operators, with a preference for those managing fewer than 50 units.
- This refranchising initiative aims to expand the number of franchisees from 300 to 400–500.
- The strategy is intended to create a more agile and resilient network, despite potential short-term disruptions.
Expenditure on modernization and advertising lies at the center of the strategy. The “Sizzle” test store, with modern furnishings, kiosks, and mobile order, had 80 units opened as of Q4 2024, with 370 remodels to achieve 51% modern image. A $1 billion buyout of Carrols Restaurant Group will accelerate remodels and refranchising with sales starting in 2025. Bringing onboard Joel Yashinsky as Chief Marketing Officer and increasing advertising by 30% ($120 million annually) is designed to increase consumer engagement.
Future Outlook and Industry Context
Franchisee profitability in 2024 averaged $205,000 per U.S. unit despite including 2023, but top performers exceeded $275,000, revealing a performance gap. Burger King has goals of $230,000 per unit by 2026 and $300,000 in the long term, with some of the remodeled stores near that goal. The chain stood at 6,701 U.S. units at the end of 2024, down 77 from the prior year, as consolidation continues to eliminate underperforming units.
- Plan for 400 additional remodels in 2025.
- Aim to achieve 85–90% modern appearance by 2028.
- Implement menu simplification to drive traffic.
- Introduce innovative concepts, including family-friendly movie sponsorships, to appeal to multi-generational shoppers.
- Target $60 billion in systemwide sales by 2028.
- Support growth and brand makeover with over $2 billion in investments.
- Allocate $500 million for Carrols remodels.
- Include $300 million in system-wide co-investments.
Consolidated Burger Holdings’ bankruptcy is a mirror of the structural and economic issues facing Burger King and the fast-food industry. Strategic closures, operation overhauls, and aggressive investments aim to balance and grow a global brand amidst ferocious competition. The future rests on rejuvenated franchisee health, improved customer experiences, and building compelling value, the success of which will determine whether Burger King can reignite its spark in the “burger wars.”
