With 116 Burger King franchise units then spread across nine states, Ogden, Utah-based Meridian Restaurants Unlimited filed for Chapter 11 bankruptcy protection on 2 March 2023. Since March, Meridian has sought, and gained, approval from the U.S. Bankruptcy Court (District of Utah) to shutter nine under-performing stores.
But now, following an auction process one week ago, the company is slated to seek Court approval today, 26 September 2023, for bids to acquire 67 of Meridian's currently franchised BK stores, including a bid from Burger King Company LLC to buy back 19 locations from Meridian (17 in Utah and 12 in Montana), with BKC agreeing to pay $3.0 million for the Utah stores.
As of last night, MyStore411.com listed 58 Burger King locations in Utah, this in spite of the fact that the largest franchisee of Burger King (BK) stores in Utah (Ogden, Utah-based Meridian Restaurants Unlimited) filed for Chapter 11 bankruptcy protection on 2 March 2023.
Since then, via filings with the U.S. Bankruptcy Court (District of Utah), as well as news reports from numerous restaurant industry media outlets, all indications are that Meridian intends to close its doors by selling-off its franchise locations and/or shuttering under-performing stores.
However, this process accelerated significantly one week ago (Tuesday, 22 September 2023), when an auction was held between Meridian and several interested parties.
As noted in Document 545 filed with the Court on Friday, Meridian accepted an offer from Burger King Company LLC (BKC) during the auction to buy-back from Meridian 29 BK franchise stores (12 in Montana and 17 in Utah).
BKC bid $3.0 million in cash for the Utah stores, which works out to slightly over $176,000 per location, an amount that is somewhat less to dramatically less than the estimated upfront costs of $220,000 to $3.4 million that Franchise Help reports it takes to get one new BK location up and running in the United States.
Nevertheless, BKC also agreed in the auction to waive
- "... the cure amounts (owed by Meridian) for royalties and advertising fees under the franchise agreements for the BKC Utah Locations," as well as
- "... all post-petition royalties and advertising fees under the franchise agreements for the other stores (operated by Meridian)."
BKC also said it will take on the "unexpired leases" for the 29 franchise stores in Montana and Utah.
Additionally, BKC "... approved all Winning Bidders (during the auction process) as potential buyers/franchisees (of the other 38 franchise stores) under the applicable BKC Franchise Agreements."
Barring unforeseen circumstances then, Meridian intends to present the outcome of its auction this afternoon in Bankruptcy Court to seek approval of the winning bids and the sale of 67 of its current BKC franchise units.
That said, the status of Meridian's remaining 24 franchised BK units that did not receive bids is unknown at this time, as is the number/location of Burger King stores in Utah that will stay open after Meridian's bankruptcy proceedings are completed.
It should be noted that Meridian did state in its Doc. 545 filing last Friday that its "... (24) underperforming restaurants ... do not generate sufficient revenue to pay for ongoing operating expenses," a statement that leads me to think these stores will likely be shuttered.
Nevertheless, as I write this article, I find myself hoping that as many Utah-based BK locations remain open as possible, especially since right about now I find myself jonesing for a Whopper with cheese, heavy pickles, minus onions. Yum!