Burger King has announced plans to invest half a billion dollars in an effort to modernize more than 600 of its restaurants across the country over the next seven years.
The restaurants getting a makeover will be specifically managed by Carrols Restaurant Group, the fast-food chain’s largest franchisee, which was recently acquired by Restaurant Brands International, BK’s parent company.
The company, which already owned 15 percent of Carrols’ shares before the May 16 announcement, announced its plan to acquire the listed company in January.
In total, the deal is worth approximately $1 billion, according to the company Franchise times.
Following a $1 billion deal to buy back restaurants from its largest franchisee, Burger King has announced a major modernization effort at 600 of its U.S. stores.
A Burger King fast food restaurant in Hialeah, Florida, USA, on Thursday, April 18, 2024. Restaurant Brands International Inc. announced its quarterly earnings results on April 30, prior to the acquisition of the Carrols-owned restaurants
Prior to the acquisition, Carrols owned more than 1,000 Burger King restaurants in approximately 23 states, in addition to 60 Popeyes Chicken restaurants in six states.
Last fiscal year, which ended at the end of September 2023 for the company, the company’s sales from these entities amounted to $1.8 billion.
Burger King plans to refranchise nearly all restaurant units in the Carrols portfolio to smaller franchisees over the next five to seven years.
Company Chairman Tom Curtis said earlier this year that they will look for franchisees with 50 stores or fewer. Executives say they want to focus on restaurant operators, rather than just owners.
Carrols CEO Deborah Derby noted that she believes it will be a benefit to shareholders if the stores are renovated sooner rather than later.
‘This is very exciting for our team. We believe our team will have additional career opportunities as part of the larger RBI family,” she said on the investor call in January when the deal was announced.
Before this acquisition, Burger King operated only 175 corporate stores out of approximately 6,000 in the US.
The brand is currently in the middle of a ‘Reclaim the Flame’ campaign, which was announced in 2022.
With ‘Home of the Whopper’ noticeably lagging behind some of its competitors, the company announced a $400 million investment in improved marketing efforts.
A second investment of $300 million was announced in April to accelerate these plans.
Carrols CEO Deborah Derby has repeatedly highlighted the ways in which she believes the RBI deal will have a positive impact on the brand and its shareholders in the long and short term.
With the ‘Home of the Whopper’ noticeably lagging behind some of its competitors, the company announced a $400 million investment in improved marketing efforts. A second $300 million investment was announced in April to accelerate those plans.
In 2022, BK’s revenue was approximately $25.5 billion – an increase of 8.7 percent over the last fiscal year.
But domestically, the brand has struggled to perform as franchisees’ profitability fell due to an apparent problem with traffic flows.
Revenue grew in the third quarter of 2023, offsetting declines from previous quarters, which RBI CE Josh Kobza called “progress” at the time.
Total restaurant sales rose again in the final quarter of 2023, corresponding to a 2.9 percent increase in traffic reported by Carrols.
RBI’s attempt to regain control of Carrols restaurants comes in the immediate aftermath of three major BK operators filing for bankruptcy last year.
TOMS King, Premier Kings and Meridian Restaurants Unlimited have all filed for bankruptcy as the ailing burger business left them no choice.