Burger King fast food restaurant with menu and customers.
Jeff Greenberg | Universal Image Group | fake images
International Restaurant Brands Is buying Carrols Restaurant Groupthe largest Burger King franchisee in the United States, for around $1 billion in cash.
Restaurant Brands will pay $9.55 per share to acquire Carrols, which operates more than 1,000 Burger King restaurants and 60 Popeyes locations. Carrols shares closed at $8.42 on Friday, giving it a market value of $459 million. The company's shares rose more than 12% in premarket trading Tuesday.
The deal is expected to be completed in the second quarter of 2024.
The acquisition, announced Tuesday, marks a change in strategy for Burger King. Its restaurants have been almost entirely franchised over the past decade, and the company currently only has 75 corporate-owned locations.
It comes more than a year after Restaurant Brands unveiled a $400 million plan to revive Burger King's U.S. business. Burger King's sales were lagging behind those of the competition and Wendy's It surpassed it as the second largest hamburger chain by sales in the United States. The comeback strategy focuses on investing in restaurant remodels and advertising to drive demand and boost franchisees' profits.
Restaurant Brands plans to rapidly remodel 600 Carrols' Burger King locations over the next five years and then sell them back to franchisees, Tom Curtis, president of Burger King's U.S. and Canada, said in a statement. The company will invest about $500 million, funded by Carrols' operating cash flow, to pay for the renovations.
“This will allow us to really focus our attention on accelerating remodels and thinking about how to refranchise this network of restaurants in smaller packages, with new and existing franchisees living close to the communities where they own the restaurants,” said Josh Kobza , CEO of Restaurant Brands. he told investors on a conference call Tuesday.
After selling most of the Carrols locations in five to seven years, Burger King plans to retain a couple hundred restaurants for “strategic innovation, training and operator development purposes.”
Earlier this month, Carrols previously announced its fourth-quarter results, sharing that comparable sales at its Burger King locations increased 7.2%, while traffic increased 2.9%. The franchisee typically outperforms the rest of the American Burger King system.
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