Burger King buys its largest franchisee for $1B to rebuild its realm — its own way
A kingdom-shaking deal… The biz behind Burger King said it’s buying the fast-food chain’s largest franchisee, Carrols Restaurant Group, for a whopping $1B. Restaurant Brands International — the proud parent of BK, Popeyes, Firehouse Subs, and fast-casual Canadian fave Tim Hortons — will take over Carrols’ 1K+ Burger King locations and 60 Popeyes spots. The plan: spend $500M to remodel 600 older BKs over the next five years.
Franch fries: Franchising lets companies like RBI earn $$ from folks who want to open and run well-known chains. Brands like Subway, Taco Bell, and Dunkin’ are heavily franchised.
Super-sized: More than 80% of McDonald’s and nearly 100% of BKs worldwide are operated by franchisees (juicy stat: there are just 75 corporate-owned BKs).
Like loose fries in the bag… Burger King risks going stale. Last year the biz said it would close as many as 400 underperforming locations despite a $400M turnaround plan announced the year before. In November, RBI said soggy BK sales were a drag on its broader business (Popeyes, meanwhile, was poppin’). Now RBI’s hoping the franchise flex — combined with big advertising — will get the restos in fry-shipping shape a lot faster than Carrols would’ve done on its own.
To have it your way, do it yourself… The Carrols acquisition is expected to go through next quarter, teeing RBI up to redo hundreds of restaurants. But RBI says it doesn’t want to run the newly shiny spots itself — it plans to flip a lot of the burger joints back to new (and more) franchisees. By taking over the remodel, RBI hopes it can up the # of US franchisees to 500 from today’s 300.