In a strategic move to bolster its presence in the fast-food industry, Restaurant Brands International (RBI), the parent company of Burger King and Popeyes, has revealed plans to acquire more than 1,000 fast-food establishments from Carrols Restaurant Group, its largest Burger King franchisee. The deal, valued at $1 billion, includes 60 Popeyes restaurants alongside the Burger King outlets.
As part of this acquisition, RBI intends to invest $500 million in the comprehensive modernization of approximately 600 Burger King restaurants. The company envisions a swift remodel of these stores over the next five years, with the ultimate goal of returning them to the hands of motivated local franchisees. Tom Curtis, President of Burger King US and Canada, expressed the company’s commitment to this revitalization effort.
The acquisition and subsequent remodeling align with RBI’s overarching “Reclaim the Flame” plan, a $400 million turnaround initiative unveiled in September 2022. This plan originally focused on upgrading 800 of the company’s flagship fast-food restaurants. With the infusion of the Carrols acquisition, RBI anticipates a substantial acceleration in the pace of remodels, increasing from the initially planned 45 in 2024 to 120 per year over the next five years at Carrols restaurants.
During a Tuesday conference call with investors, RBI outlined its strategy to sell a limited number of remodeled restaurants to new or existing Burger King franchisees located in close proximity to the communities served by the establishments. New operators in this model are expected to own 50 restaurants or fewer. The remodeled Carrols restaurants are positioned to serve as a blueprint for RBI’s broader objective of fully modernizing all its restaurants by approximately 2028.
As of September 30, 2023, RBI has already invested $45 million in high-quality remodels, relocations, restaurant technology, kitchen equipment, and building enhancements. The company aims to set an example with the Carrols acquisition, emphasizing its commitment to brand revitalization efforts already underway.
Stephens analyst Joshua Long sees the acquisition as a logical move for RBI, citing Carrols as a robust operator. Long believes that this transaction aligns with the broader Reclaim the Flame plan, accelerating brand revitalization while strengthening operations.
The acquisition comes at a pivotal time for Burger King, which has faced challenges in maintaining relevance compared to competitors like McDonald’s and Wendy’s. The fast-food giant has been implementing various strategies to refresh its brand, including logo overhauls, menu simplification, and the introduction of new offerings like chicken wraps. The move to acquire and revamp over 1,000 restaurants signifies a significant step in Burger King’s ongoing efforts to reestablish itself in the competitive fast-food landscape.
