From Fortune Magazine:

-Burger King’s parent company, RBI, recently spent a significant $1 billion to acquire its largest franchisee, Carrols Restaurant Group, in a move to quickly modernize its U.S. locations and compete with top rival McDonald’s.

-This acquisition comes after Burger King fell behind competitors in customer numbers during the pandemic and currently lags in modernizing its franchise locations compared to peers like McDonald’s.

-The $1 billion purchase aims to significantly accelerate Burger King’s modernization plan, which currently has only revamped 40% of U.S. restaurants.

-After acquiring Carrols, RBI plans to remodel 600 of the franchisee’s 1,022 Burger King locations across 23 states to give them a more “modern image.” The parent company will only hold on to the locations for a few years before refranchising them.

-The Carrols acquisition is deemed a move toward accelerating Burger King’s turnaround, as it will help the company rapidly improve guest experience, sales growth, and store profitability.

-The $1 billion all-cash deal for Carrols, which also owns 60 Popeyes locations, values the franchisee at a 13% premium to its Friday closing price and a 23% premium to its 30-day volume-weighted average price. Carrols’ stock rose roughly 12% the day after the announcement.

-Carrols, which operated Burger King locations since 1976, had strong financial performance prior to the acquisition, with an increase of 7.2% in comparable restaurant sales year-over-year in the fourth quarter of 2023 and a full-year restaurant sales jump of 8.4% to nearly $1.9 billion.

-RBI’s stock (ticker: QSR) fell more than 3% after the Carrols purchase was announced, a sign of concern over the cost of the acquisition, but RBI sees it as a long-term investment to accelerate growth and create a stronger competitive position for Burger King.

-While Restaurant Brands International did not personally respond to Fortune’s request for comment on the Carrols acquisition, the move signals Burger King’s commitment to competing and accelerating growth.



Read more: Burger King splashes out $1 billion for its largest franchisee in an attempt to ‘Reclaim the Flame’ after lagging during COVID