MIAMI — Burger King, the fifth largest fast-food chain in the world, has reached an agreement where the company, with its parent company Restaurant Brands International (RBI), will acquire its largest franchisee company, Carrols Restaurant Group for approximately $1 billion.
RBI and Burger King will be obtaining all the Carrols issued and outstanding shares that are not already held for $9.55 per share in an all-cash transaction, the companies announced.
Burger King has more than 19,000 locations in over 100 countries worldwide. Carrols operates 1,022 Burger King locations in 23 states in the U.S., which generated approximately $1.8 billion of system sales last year.
“Carrols has demonstrated strong and improving restaurant operations over the years,” Tom Curtis, president of Burger King U.S. and Canada, said in a statement. “This acquisition is an exciting accelerator to our ‘Reclaim the Flame’ plan that is focused on relentlessly pursuing a better experience for our guests. We are going to rapidly remodel these restaurants over the next five years or so and put them back into the hands of motivated, local franchisees to create amazing experiences for our guests.”
Burger King notes that its Reclaim the Flame initiative has planned many remodels following a $400 million announced investment last year that it says it will put toward improving operations, enhancing marketing and technology and digital improvements.
On the Carrols acquisition, Josh Kobza, CEO of RBI, said, “This is a terrific example of our commitment to put our capital to work to accelerate growth and support Tom (Curtis) and his team in their broader efforts to have a more competitive Burger King restaurant base. The strategic merits of this acquisition are very compelling and consistent with our objective to invest our capital in long-term, high-return opportunities.”
Burger King added that it plans to increase its rate of remodels of Carrols locations, with a further investment of $500 million of capital, which will be funded by Carrol’s operating cash flow, to update about 600 of the acquired restaurant locations that the company states do not meet its “modern image.”
The Jan. 16 announcement, “is a testament to our more than 24,000 Carrols team members who have helped drive the company to record levels of profitability over the past 12 months,” Deborah Derby, Carrols president and CEO, said in a statement. “The results have allowed us, through this transaction, to deliver immediate and certain value to Carrols shareholders at an attractive premium to the company’s current and historical share prices.”
“Additionally, we believe our team members will now have additional opportunities as part of the greater RBI family – in our office, in the field and especially in our restaurants, including for long-time managers who may want to become franchisees themselves,” Derby noted. “We look forward to working closely with Tom (Curtis) and the rest of the Burger King team in the months and years ahead.”
Subject to customary closing requirements, the companies expect this transaction to be completed in the second quarter of 2024.