Burger King revamp aims at higher-priced kin

[October 07, 2009]  CHICAGO (AP) -- Burger King Corp. plans to swap its generic fast-food feel and bland tiles and tabletops for a vibe that's more sit-down than drive-through.

As part of a plan revealed Wednesday in Amsterdam, the company will announce a massive effort to overhaul its 12,000 locations worldwide. The sleek interior will include rotating red flame chandeliers, brilliant TV-screen menus and industrial-inspired corrugated metal and brick walls.

"I'd call it more contemporary, edgy, futuristic," Chairman and CEO John Chidsey told The Associated Press. "It feels so much more like an upscale restaurant."

But that comes with an upscale price: The new look is expected to cost franchisees, who operate 90 percent of Burger King's locations, between $300,000 to $600,000 per restaurant.

The company said the new design, called "20/20" at the Miami-based chain, is already in place at about 60 locations around the world. Burger King expects about 75 more redesigned restaurants to be open by the end of next year. But it will take years before all its locations are transformed.

Burger King franchise owners are contractually required to update their restaurants after a set period of time, and executives said the redesign will be the primary option for future upgrades. All new restaurants will be built using the plan.

So far, remodeled restaurants have seen sales climb about 12 to 15 percent, while restaurants that are torn down and completely rebuilt at the same location have seen sales climb by as much as 30 percent, Chidsey said.

Observers say the hip, urban and masculine elements in the redesign may be a hit with Burger King's most loyal customers -- young men who frequent the chain known as much for its signature Whoppers and "steak burgers" as its sometimes-creepy "King" commercials. But some experts are skeptical about whether sales will grow as much as the company claims and how eager franchise owners will be to part with that kind of cash, particularly in a sour economy.

Chidsey said he thinks most franchise owners, who typically own both their restaurant's building and the land, won't have trouble obtaining financing and will be swayed once they see how sales can climb.

Morningstar analyst R.J. Hottovy said the reformulated restaurant could keep diners at the table longer but may not draw in enough extra diners to justify the cost.

"I don't think they'll change their perception," he said. "They're pretty entrenched in their reality."

A group representing Burger King franchise owners didn't immediately comment.

Fast-food restaurants typically get almost two-thirds of their business from drive-through or carryout orders. More appealing interiors could help the company compete with sit-down counterparts that many customers think offer better food and better ambiance.

Ron Paul, president of the food consultant company Technomic Inc., said he thinks the redesign shows just how determined Burger King is to compete with "fast casual" restaurant chains such as Chipotle, Starbucks and Panera, which customers think of as a cut above typical fast food.

"People in the fast-food category are recognizing they've been losing customers to the fast-casual player," he said. "What this sounds like is an attempt to get that dining-in business back by making it an attractive environment."

They might also help Burger King, the No. 2 burger food chain the U.S., stand out from larger rival McDonald's Corp. and other competitors, including regional chains, who've begun to add bigger and better burgers to their menus as they clamor for a share of the growing burger market that's worth $100 billion in the U.S.

"It's a competitive necessity to square up against the competition," Chidsey said.

While the most noticeable changes will be inside restaurants, Burger King executives also plan to update exteriors, too, adding metal canopies and more signs proclaiming "Home of the Whopper."

At the same time, the company is beefing up its value menu, temporarily adding a $1 double cheeseburger to U.S. menus. And it's also in the final stages of installing new broiler ovens that cut energy use and will let the company roll out new menu items in the future.

On deck is the Steakhouse XT burger, which has a thick patty topped with mayonnaise, fried onions, lettuce, steak sauce, cheese and tomatoes. It's slated to join menus in February.

[Associated Press; By ASHLEY M. HEHER]

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