At a franchise convention in October, Burger King leadership made sure to celebrate wins with its operator base. Among these triumphs were improved franchisee profitability and traffic jumping from negative to above industry norms in recent weeks.

But corporate reiterated to its franchise community this is progress, not success. At least for now.

“I’m happy with the outcomes we have driven thus far,” RBI chairman Patrick Doyle said. “We are not taking a victory lap by any means.”

For instance, the footprint still requires optimization. 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.

RBI CEO Josh Kobza acknowledged Burger King’s restaurant pruning would be “a bit of a drag this year.” The company revealed in May roughly 300-400 gross restaurants are expected to shut down in 2023, above the historical norm of about 200 stores. However, the executive remains confident RBI as a whole can surpass 5 percent unit growth next year. The optimism comes from the fact Burger King U.S. is starting to show favorable results.

READ MORE: Step inside Burger King’s “Sizzle” store of the future

“I think what we’re seeing in the business, between sales consistently growing, now having stable traffic that will look to turn to positive over time, and franchise profitability—probably most important of all, which is really moving back in the right direction—that starts to give us a bit more visibility into being able to stabilize the unit count next year and beyond,” Kobza said during RBI’s Q3 earnings call. “So we think that’s a big driver in terms of how we can evolve the net restaurant growth globally.”

The chain and its franchisees attribute Burger King’s positive trajectory to the $400 million Reclaim the Flame turnaround plan, which was announced more than a year ago. Of that financial figure, $200 million is dedicated to remodels. Burger King is in the early days of these redesigns, but thus far, it’s seeing sales uplifts and returns above expectations. Franchisees are buying in too. Over 80 percent have committed to either full remodels or scrape and rebuilds—more than originally anticipated.

Another $50 million goes toward equipment and tech updates at the store level. in Q3, Burger King deployed $6 million toward this effort and is in the process of inserting these materials to more than 4,000 restaurants. Results are positive, including better tech stability, better guest satisfaction, and higher average sales compared to stores without new equipment in the same DMA.

“Over the past 12 months of our Reclaim the Flame investment, the BK team and franchisees have made great progress in positioning the brand for profitable traffic growth and a healthy reinvestment appetite,” Kobza said. “This progress, and the enthusiasm we’re seeing from our franchisee base, gives us confidence that we’re on the right path to deliver a modern system with compelling unit economics.”

Burger King didn’t book any expenses associated with its $120 million advertising plan in the third quarter. It spent roughly $25 million through September 30 and will use the rest by the end of 2024.

“I wouldn’t say that was any particular strategy. It’s just the way that the advertising spending and different campaigns have laid out,” Kobza said. “I think as you look into next year, of course, we’ll have some new stuff coming. We’ll have some exciting new products. We’ll definitely have some new campaigns. But I think you can probably expect that a lot of those will continue to be focused on our core equities. We think that Burger King has some really special things about it between the Whopper flame-grilling and ‘Have it Your Way.’ And while we’ll always bring kind of new twists on things, I think you can expect more focus on a lot of those core equities from us.”

U.S. same-store sales rose 6.6 percent in Q3, and systemwide sales lifted 6 percent. Growth in the quarter was fueled by the Whopper, Royal Crispy Wraps, and the “You Rule” marketing initiative.

Kobza told investors that Burger King is shuttering “older and lower-performing restaurants to support a more modern system increasingly run by better operators.” Similarly, Doyle described it as taking “difficult but important steps this year to work through several distressed situations with franchisees and reposition restaurants into the hands of stronger local operators.”

Doyle was transparent about this move when he spoke to analysts in May.

“There will always be a minority who aren’t dedicated enthusiastic operators, and that’s OK,” Doyle said during RBI’s Q1 earnings call. “We’ll work with them to leave the system and move on to do something else. There simply is no room for franchisees who are not willing or able to work hard to operate restaurants that are better than the system average over the long term. But we’re talking about a small number here in these instances. We’re working to find partners who are all in.”

Two major franchisees—Meridian Restaurants Unlimited and TOMS King—declared bankruptcy in 2023. The remaining open restaurants were distributed to Burger King corporate and other franchisees. A third franchisee, 172-unit Premier Kings, entered bankruptcy in late October.

Doyle said that the brand “will have addressed the bulk of these situations by year-end.”

“We’re a little bit under 50 percent in the image that we want to be in,” Doyle said. “It’s not a great reflection of where we are. And we’ve got all of those improvements ahead of us. So if we’ve got assets that don’t all look great today and we’re already outperforming on a traffic standpoint, that tells you we should be pretty confident about what we’re going to be able to do once we get those assets where we want to be.”

In addition to remodels, the chain is moving forward with a new prototype called “Sizzle.” Two stores have opened for business—one in Marion, North Carolina, and the other in Las Vegas. The Marion establishment was constructed by Carrols Restaurant Group, Burger King’s largest franchisee. The format involves kiosks and mobile pickup inside the store and at the drive-thru. Franchisees can choose from 40, 60, or 80 dining room seats. The prototype reduces the traditional box by about 200 square feet to support greater off-premises needs.

Burger King’s digital sales grew more than 40 percent year-over-year in Q3, leading to a record mix of 14 percent. Corporate stores with kiosks are seeing a 28 percent digital mix.

Elsewhere in RBI

Popeyes

Popeyes U.S. same-store sales increased 5.6 percent. Comps were driven by continued strength of the sandwich platform and the chain’s newest menu innovation, Ghost Pepper Wings. These wings helped the brand achieve a record digital sales mix of approximately 25 percent and its highest levels of chicken quick-service traffic share in over two years. Additionally, the chicken chain is in the beginning stages of piloting easy-to-run kitchens featuring integrated production lines and simplified processes, modeled after international restaurants.

Popeyes finished Q3 with 3,000 U.S. stores, up from 2,858 a year ago. It had 1,373 international outlets as well.

Tim Hortons

Tim Hortons Canada saw comps rise 7.6 percent in Q3, leading the way for RBI’s major segments. The growth was fueled by a healthy balance of average check and traffic. The higher sales were also aided by strength in core breakfast and baked goods, continued afternoon food and beverage extensions, and operational efficiencies.

The coffee chain finished Q3 with 3,874 stores in Canada and 1,827 in the rest of the world.

Firehouse Subs

Firehouse’s U.S. same-store sales rose 3.9 percent in the third quarter. The leadership team rolled out a new development incentive for franchisees to help them grow in key markets over the next few years. Internationally, the fast casual inked deals to open 100-plus locations in the United Arab Emirates and Oman. The first unit in Mexico should open by the end of 2023.

The sandwich concept had 1,188 U.S. units at the end of Q3. It had 78 stores around the rest of the world.