Burger King Owner to Buy Largest Franchisee for $1 Billion

by Hayden Spiess

Toronto and Syracuse, N.Y. — Toronto-based Restaurant Brands International Inc. (RBI) has agreed to acquire Syracuse-based Carrols Restaurant Group Inc. for $1 billion. RBI (NYSE: QSR) owns the Burger King, Popeyes, Firehouse Subs and Tim Hortons brands. Carrols (NASDAQ: TAST) is the largest Burger King franchisee in the United States, operating 1,022 locations in 23 states.

Burger King says the transaction is part of its “Reclaim the Flame” plan to accelerate sales growth and drive franchisee profitability. The transaction follows the brand’s initial $400 million investment announced in September 2022 to drive high-quality remodels, improve operations, enhance marketing and support ongoing technology and digital priorities.

Burger King plans to remodel restaurants over the next five years by investing approximately $500 million of capital, funded by Carrols’ operating cash flow, to remodel roughly 600 acquired restaurants that are not currently considered “modern image.”

Carrols will continue to operate the acquired restaurants in partnership with Burger King’s operations teams. Burger King ultimately plans to refranchise the vast majority of the portfolio to new or existing smaller franchise operators who live in their local communities. Following refranchising the acquired restaurants, which Burger King expects to be completed in five to seven years, Burger King will maintain a company restaurant portfolio of several hundred restaurants for innovation, training and operator development purposes.

“We are going to rapidly remodel these restaurants over the next five years or so and put them back into the hands of motivated, local franchisees to create amazing experiences for our guests,” says Tom Curtis, president of Burger King U.S. and Canada.

Under the terms of the merger agreement, RBI will acquire all of Carrols issued and outstanding shares that are not already held by RBI or its affiliates for $9.55 per share in an all-cash transaction. This price represents a premium of 23 percent to Carrols’ 30-day volume-weighted average price as of Friday, Jan. 12. RBI and its affiliates currently hold approximately 15 percent of Carrols outstanding equity. The parties plan to complete the transaction in the second quarter of 2024.

Carrols has operated Burger King restaurants since 1976. The company began operating Popeyes restaurants in 2019, with a portfolio of 60 locations in six states. Carrols’ stock price opened at $9.44 per share Wednesday, Jan. 17, up sharply from $2.16 per share one year ago.

RBI is one of the world’s largest quick-service restaurant companies with over $40 billion in annual sales and over 30,000 restaurants in more than 100 countries. RBI’s stock price opened at $75.50 per share Wednesday, Jan. 17, up from $66.32 per share one year ago.

Founded in 1954, the Burger King brand is the second largest fast food hamburger chain worldwide. Burger King operates more than 19,000 locations in more than 100 countries and U.S. territories. Almost 100 percent of Burger King restaurants are owned and operated by independent franchisees, many of them family-owned operations that have been in business for decades.

— Kristin Harlow

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