The company that owns Burger King plans to acquire its largest franchisee in the U.S. for $1 billion in an effort to expedite growth plans.
Carrols is the largest Burger King franchisee in the United States, operating 1,022 Burger King restaurants in 23 states. Those locations generated approximately $1.8 billion of system sales during the twelve months ending September 30, 2023.
“Carrols has demonstrated strong and improving restaurant operations over the years,” said Tom Curtis, president of Burger King U.S. and Canada, in a news release.
“This acquisition is an exciting accelerator to our Reclaim the Flame plan that is focused on relentlessly pursuing a better experience for our guests. 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.”
Restaurant Brands International (RBI) is the parent company of Burger King. The deal to acquire Carrols is an all-cash transaction.
The “announcement is a testament to our more than 24,000 Carrols team members who have helped drive the company to record levels of profitability over the past 12 months,” Deborah Derby, president and CEO of Carrols, said. “These results have allowed us, through this transaction, to deliver immediate and certain value to Carrols’ shareholders at an attractive premium to the company’s current and historical share prices.”
RBI’s transaction follows Burger King’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,” according to the release. The company expects to bring the new portfolio “to modern image” over the next five years.
“To accomplish this, the team plans to invest approximately $500 million of capital, funded by Carrols’ operating cash flow, to remodel approximately 600 acquired restaurants that are not currently considered modern image,” the press release reads.
Burger King plans to refranchise most of the newly acquired restaurants to new or existing franchise operators who live in local markets over the next five to seven years.
