Photo by Ismail Hadine on Unsplash
Burger King Owner To Buy Chain’s Biggest US Franchisee for $1 Billion
January 17, 2024
Restaurant Brands International will spend $1 billion in cash to buy Carrols Restaurant Group, which is the largest U.S. franchisee of Burger King, reports CNBC.
The news about this purchase comes a year after Restaurant Brands shared its scope to spend $400 million to turn around Burger King in the U.S. This deal is expected to be completed by the end of the second quarter of this year.
Burger King has been struggling to keep up with the competition, specifically Wendy’s, which “overtook it as the second-largest burger chain by U.S. sales.” This comeback strategy involves investing in reviving the restaurant and giving a boost to advertising to increase demand and franchisee profits.
According to Tom Curtis, president of Burger King U.S. and Canada, Restaurant Brands aims to give 600 of Carrols’ Burger King locations a makeover in the next five years and then sell them back to franchisees.
Carrols, which runs more than 1,000 Burger King restaurants and 60 Popeyes locations, will be acquired for $9.55 per share by Restaurant Brands. On Friday, Carrols’ stock closed at $8.42, with a market value of $459 million, and the company’s shares spiked by over 12% in pre-market trading after the news broke on Tuesday.
The announcement of this deal is a transitional one for Burger King’s strategy, as its restaurants have always been predominantly franchised for the last 10 years with only 175 locations that are wholly owned.
Speaking to investors on a conference call on Tuesday, Restaurant Brands CEO Josh Kobza said, “This will allow us to really focus our attention on accelerating remodels and being thoughtful about how to refranchise this restaurant network into smaller packages, with new and existing franchisees who live close to the communities where they own the restaurants.”
The company plans to allocate around $500 million, financed through Carrols’ operational cash flow, to pay for the refurbishments.
Speaking to CNBC, Curtis said, “I’ve always been a big believer in the network effects, getting an entire portfolio remodeled.” He added, “I think that when consumers see that across the market consistently, it helps with recruiting, it helps with staffing the restaurants, it helps with the overall image and perception of the brand.”
Discussions on how the chain can remodel 120 restaurants per year will be kicking off as soon as today.
Recent News
Premium and Healthier Food Options Gain Traction
As consumers become more mindful of their spending, the global sales of cooking ingredients and meals saw a notable increase of 4.4% in 2023, driven by inflation and higher commodity prices, according to Euromonitor International. This trend underscores a shift in consumer behavior towards more economical choices while still showing a preference for premium, healthier, and environmentally sustainable options.
Dairy Manufacturers Inc. Issues Voluntary Recall of Baby Formula
In a significant move, Dairy Manufacturers Inc., a Texas-based company, has initiated a voluntary recall of several baby formula products after they were found to be noncompliant with U.S. Food and Drug Administration (FDA) regulations. The recall encompasses all lot codes of three specific products: Crecelac Infant 0-12, Farmalac 0-12, and Farmalac 0-12 Low Lactose. This announcement was officially published on the FDA’s website on Saturday.
Fitness Equipment to Become $18.4 Billion Market
The global fitness equipment market is projected to reach $18.4 billion by 2033, growing at a CAGR of 3.02% from 2024 to 2033, according to Allied Market Research. Key drivers include the integration of Internet of Things (IoT) technology in fitness devices and the rise of corporate wellness programs. IoT-enabled equipment captures workout metrics in real time, enhancing user engagement and offering personalized insights. Corporate wellness initiatives promote physical activity in the workplace, increasing demand for fitness equipment in corporate gyms.
Walmart Ends Partnership with Capitol One
Walmart has officially ended its consumer credit card agreement with Capital One, marking a significant shift in the retail giant’s financial partnerships. This decision follows a series of disputes over customer service issues that culminated in a legal battle and a federal judge’s ruling.