Premier Kings, a 172-unit Burger King franchisee, declared bankruptcy in late October after the death of its owner created operational instability. It’s the third Burger King franchisee to enter court proceedings this year.
The company was founded in 2009 by Manraj Sidhu. He started with six stores in the Birmingham, Alabama, market and expanded in 2014 with 34 more units throughout Alabama, Georgia, and Tennessee. From 2015 to 2021, 100-plus restaurants entered the portfolio in Tennessee, Florida, and South Carolina. Premier Kings earned $233.3 million and $255 million in sales in 2021 and 2020, respectively.
Sidhu passed away unexpectedly in May 2022, which put Premier Kings in a difficult position as he was the sole stockholder and manager. The COVID pandemic had an impact on operations as well.
“This tragic loss, coupled with various macroeconomic factors, has caused tremendous uncertainty and disruption within the business,” court documents stated. “Those factors include, among others, the national impact of the COVID-19 pandemic on restaurant operations, high inflation, increased borrowing rates, and an increasingly limited qualified labor force.”
In 2022, sales dropped to $223 million. The company also swung a net operating loss of $27 million. As of September 30, Premier Kings had $134.5 million in assets and $123.1 million in liabilities.
Sidhu’s estate representative and consultants decided a sale was the best way forward. Premier Kings retained Raymond James & Associates to start a marketing process and solicit interest. Ahead of this anticipated sale, the company closed several restaurants to stabilize the business. But Premier Kings still faced pressure from landlords, vendors, and secured lenders. The difficult position forced the chain to reorganize in chapter 11 bankruptcy.
In place are two stalking horse bids, or offers that set the minimum for an impending sales auction. RRG of Jacksonville bid $15.5 million for 44 restaurants in Savannah, Georgia, and Jacksonville, Florida. Newell-Berg Alliance bid $18.5 million for 31 units in North Alabama. Both are existing Burger King franchisees.
As of the bankruptcy date, 44 bidders have shown interest.
Premier Kings follows fellow Burger King franchisees Meridian Restaurants Unlimited and TOMS King, which both declared bankruptcy earlier this year. Their remaining open restaurants were distributed to Burger King corporate and other new and existing franchisees. Sidhu also owned Cajun Kings, a Popeyes franchisee entity that went bankrupt in March.
Burger King is in the midst of a $400 million Reclaim the Flame turnaround plan, but store count is dwindling as the brand rids itself of underperforming locations. Since the start of 2023, Burger King U.S. has shuttered a net of nearly 200 restaurants. After entering the year with more than 7,000 domestic units, the fast-food brand ended Q3 at 6,864 stores. That’s the lowest the U.S. system has been in decades.