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Burger King May Permanently Close 10% of U.K. Restaurants, Fire 1,600 Workers Due to Pandemic

By Rich Duprey – Jul 9, 2020 at 10:11AM

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The burger chain was unable to operate its restaurants during the crisis despite still having to pay fixed costs.

The COVID-19 pandemic is hitting Burger King hard in the U.K., causing the burger chain to consider closing up to 10% of its restaurants there, which would result in the loss of as many as 1,600 jobs. 

Unlike in the U.S., where Restaurant Brands International (QSR 2.53%) was able to continue operating the burger chain by offering takeout and delivery, U.K. restaurants were forced to fully close.

Store closed sign

Image source: Getty Images.

No way to survive

Rather than allowing restaurants to offer contactless service through the pandemic, the national government has proposed various schemes to assist furloughed workers, such as paying up to 80% of their salaries and slashing the value-added tax restaurants pay from 20% to 5% until next year.

Now that restaurants are reopening, it will also begin subsidizing half the cost of food consumers order at restaurants up to 10 British pounds for the month of August.

Burger King's U.K. president Alasdair Murdoch told the BBC that while the proposal was "innovative," it just can't overcome the impact of having not been able to take in any money while still having to pay fixed costs like rent.

"We don't want to lose any. We try very hard not to," he told the BBC, "but one's got to assume somewhere between 5% and 10% of the restaurants might not be able to survive." Murdoch believes that also applies to the entire industry.

Burger King operates 530 restaurants in the country and has reopened 370 of them. It has around 16,500 workers in the U.K., meaning it could be firing almost 10% of its staff.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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