Burger King Franchiser RBI To Buy 1,000 Locations For $1B, Plans Renovations

Restaurant Brands International has struck a deal to buy Carrols Restaurant Group, the largest Burger King franchisee in the U.S. with about 1,000 locations, for about $1B. The all-cash sale is set to close in the second quarter.

The acquisition of Carrols would vastly increase the number of Burger King-branded restaurants RBI owns directly. RBI counts about 75 locations among its holdings. But the company doesn't plan to keep the enlarged portfolio indefinitely.

“We are going to rapidly remodel these restaurants ... and put them back into the hands of motivated, local franchisees,” Tom Curtis, president of Burger King U.S. and Canada, said in a statement.

The refranchising is expected to take five to seven years, according to Curtis, although the company also says it will retain “a couple of hundred restaurants” for training and operator development purposes.

RBI plans to spend about $500M, funded by Carrols' operating cash flow, to remodel about 600 of the acquired restaurants that “are not currently considered modern image.”

The deal comes as Burger King continues its efforts to boost sales, which it kicked off in September 2022 and has taken the form of remodels, enhanced marketing and upgraded tech.

The company reported in November that same-store sales were up 6.6% in Q3, but it also said it had closed about 200 locations during last year, Restaurant Business reported.

There are about 19,000 Burger King locations in more then 100 countries. The chain is the seventh largest in U.S. sales, according to the most recent Technomic report, just ahead of Subway but behind its two main burger rivals, Mcdonald's and Wendy's.

Under the terms of the transaction, RBI will acquire Carrols for $9.55 per share, which the buyer says represents a premium of 23% over Carrols stock's average price over the month ending Jan. 12. Carrols stock closed at $8.42 that day.