Burger King has announced plans to invest $500 million in an effort to modernize more than 600 of its restaurants nationwide over the next seven years.
The restaurants being renovated are specifically operated 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, signaled its plan to take the company public in January.
In total, the deal is worth about $1 billion, according to 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 stores across the United States.
A Burger King fast food restaurant in Hialeah, Florida, U.S., on Thursday, April 18, 2024. Restaurant Brands International Inc. released its quarterly earnings numbers on April 30, ahead of the acquisition of the restaurants owned by Carrols.
Before the acquisition, Carrols owned more than 1,000 Burger King restaurants in about 23 states, as well as 60 Popeyes Chicken restaurants in six states.
Last fiscal year, which ended for the company at the end of September 2023, the company’s sales to those entities exceeded $1.8 billion.
Burger King plans to refranchise nearly all restaurant units in Carrols’ portfolio to smaller franchisees over the next five to seven years.
Company president Tom Curtis said earlier this year that they will look for franchisees with 50 stores or fewer. Executives say they are looking to focus on restaurant operators, rather than just owners.
Carrols CEO Deborah Derby said she believes it will be a benefit to shareholders if the stores are remodeled as soon as possible.
‘For our team this is very exciting. “We believe our team will have additional career opportunities as part of the greater RBI family,” he said in the January investor call when the deal was announced.
Before this acquisition, Burger King operated only 175 corporate stores of the approximately 6,000 in the United States.
The brand is currently in the middle of a campaign for ‘Reclaim the Flame’, which was announced in 2022.
As the ‘House of the Whopper’ was noticeably behind some of its competitors, the company announced a $400 million investment in an improved marketing effort.
A second investment of $300 million was announced in April to accelerate those plans.
Carrols CEO Deborah Derby has repeatedly emphasized the ways in which she believes the deal with RBI will have a positive impact on the brand and its shareholders in the long and short term.
As the ‘House of the Whopper’ fell noticeably behind some of its competitors, the company announced a $400 million investment in an improved marketing effort. A second investment of $300 million was announced in April to accelerate those plans.
In 2022, BK’s sales reached around $25.5 billion, an increase of 8.7 percent from the last fiscal year.
But nationally, the brand has struggled with its performance as the franchise’s profitability fell amid an apparent traffic flow problem.
Sales grew during the third quarter of 2023, offsetting declines seen in previous quarters, which RBI CE Josh Kobza at the time called “progress.”
Total restaurant sales increased again in the final quarter of 2023, corresponding to a 2.9 percent increase in traffic reported by Carrols.
The RBI’s bid to regain control of Carrols-owned restaurants comes close on the heels of three major BK operators filing for bankruptcy last year.
TOMS King, Premier Kings and Meridian Restaurants Unlimited have filed for bankruptcy because the weakening burger business left them no choice.