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Burger King Owner to Buy Biggest Franchisee for $1 Billion

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(Bloomberg) — The owner of Burger King plans to buy its largest US franchisee for about $1 billion in cash in a bid to fast-track an overhaul of hundreds of locations and win back customers.

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Restaurant Brands International Inc. said it expects to complete its purchase of Carrols Restaurant Group Inc. by the second quarter and spend another $500 million to remodel 600 of Carrols’ more than 1,000 locations.

After that, the fast-food chain plans to refranchise most of the stores to new or existing smaller franchisee owners, a fix-it project that could take five to seven years.

The deal is part of an ongoing plan by Restaurant Brands to invest in new technology, boost advertising spending and enhance the customer experience within stores to boost traffic and reverse years of slumping sales. Restaurant Brands announced an initial $400 million investment in September 2022.

Carrols’ shares jumped as much as 14% in Tuesday pre-market trading, after being halted. Restaurant Brands shares were flat in pre-market trading. They rose 21% in 2023, outpacing the 11% increase for the New York Stock Exchange’s Composite Index during the same period.

The chain will pay $9.55 a share for all Carrols shares not already held by RBI or its affiliates, according to a statement Tuesday. The price represents about a 23% premium to Carrols’ 30-day volume-weighted average price as of Friday, the company said.

Read More: Burger King Staff Must Offer Diners Paper Crowns, Say ‘You Rule’

This story was produced with the assistance of Bloomberg Automation.

(Updates with Carrols stock move in sixth paragraph.)

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