Restaurant Brands International, the parent company of Burger King, has announced its acquisition of Carrols Restaurant Group, the largest Burger King franchisee in the U.S., for approximately $1 billion in cash. The deal marks a significant shift in strategy for Burger King, which has been primarily franchised for the past decade.
The acquisition, revealed on Tuesday, comes more than a year after Restaurant Brands unveiled a $400 million plan to revitalize Burger King’s U.S. business. This move is aimed at driving demand and boosting franchisee profits through investments in restaurant remodels and advertising.
Restaurant Brands plans to rapidly remodel 600 of Carrols’ Burger King locations over the next five years and then sell them back to franchisees. The company will invest about $500 million, funded by Carrols’ operating cash flow, to finance the renovations.
Tom Curtis, president of Burger King U.S. and Canada, emphasized the importance of the network effects, stating, “I think that when consumers see that across the market consistently, it helps with recruiting, it helps with staffing the restaurants, it helps with the overall.”
The deal is expected to be completed by the second quarter of 2024. Following the acquisition, Restaurant Brands International will pay $9.55 per share to acquire Carrols, which operates more than 1,000 Burger King restaurants and 60 Popeyes locations. Carrols’ stock closed at $8.42 on Friday, giving it a market value of $459 million. The company’s shares surged over 12% in premarket trading on Tuesday.
Josh Kobza, CEO of Restaurant Brands, highlighted the company’s intention to focus on accelerating remodels and being thoughtful about refranchising the restaurant network into smaller packages, with new and existing franchisees who live close to the communities where they own the restaurants.
With this acquisition, Restaurant Brands International aims to strengthen its position in the fast-food industry and drive growth for the Burger King brand in the highly competitive U.S. market.
