Carrols Restaurant Group Inc., the largest Burger King owner in the US, is cutting its chicken-nugget portion sizes as surging beef and wage costs hit profit.
Beef costs were up 33% in the fourth quarter compared with a year earlier for Carrols, which owns more than 1,000 Burger King stores. It’s a big deal for the seller of Whopper hamburgers — beef makes up 25% of the company’s commodity purchases, CEO Dan Accordino said Thursday on an earnings conference call.
“Domestic food, paper producers and distributors supplying most of our commodities are dealing with labour constraints along with higher fuel costs and are passing these increases on to us,” he said.
As a result, Carrols has raised menu prices, and will do so again in 2022, he said. The company is further trying to combat inflation by reducing the number of chicken nuggets in Burger King meals to eight from 10. Carrols is also a franchisee of Popeyes, another Restaurant Brands International Inc. chain.
Across the dining industry, restaurants are facing mounting inflation for key ingredients such as beef and pork, along with supply-chain disruptions largely fuelled by a lack of labour. For Carrols, hourly wage rates were up about 14% from last year, Accordino said.
“We believe labour rates will continue to rise throughout the year,” he said.
Carrols shares were down 3.1% at 11:44am in New York.
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