Burger King launched its “Reclaim the Flame” campaign in 2022 to drive restaurant sales in the United States.
Restaurant Brands International acquired Burger King’s largest franchisee, Carrols Restaurant Group, the company announced May 16.
RBI announced its plan to acquire the public company in January. It already owned 15 percent Carrols’ stock. At $9.55 per share, the deal is worth about $1 billion. Burger King will invest $500 million to modernize more than 600 of Carrols’ restaurants over the next seven years.
Carrols owned 1,022 Burger King restaurants in 23 states, plus another 60 Popeyes in six states. In the year ending September 30, systemwide sales topped $1.8 billion.
The nearly 20,000-unit franchise plans to refranchise nearly all of Carrols’ portfolio to smaller franchisees in the next five to seven years. Burger King President Tom Curtis said in January the company is looking for franchisees with 50 stores or less, focusing on operators rather than just owners.
Carrols CEO Deborah Derby noted the benefit to stores getting remodeled faster than before and the return on investment for shareholders. “For our team, this is very exciting. We believe our team will have additional career opportunities as part of the greater RBI family,” Derby said on the investor call January 16, when the acquisition was initially announced.
Related: Burger King Franchisee Carrols Turns In Strong 2023
Before this acquisition, Burger King was operating just 175 corporate stores.
Carrols CEO Deborah Derby
Burger King is in the midst of revamping the brand with its “Reclaim the Flame” initiative, which is announced in 2022. The company invested $400 million to enhance marketing and operations, and added another $300 million this April to accelerate plans.
Related: Burger King’s Revival Efforts Generate Early Optimism
The burger brand’s sales hit $25.48 billion in 2022, up 8.7 percent. Its domestic performance, however, has struggled in recent years as sales and traffic slowed and franchisee profitability took a hit.
Same-store sales rose 6.6 percent in the third quarter of 2023, following an 8.3 percent increase in that metric in the second quarter. Traffic remained flat, but previous quarters saw a decline, so RBI CEO Josh Kobza called the trend “progress” in the Q3 earnings call last year.
The company’s total restaurant sales were up 5.7 percent in the fourth quarter of 2023, according to preliminary sales results released in January, to $470.4 million, compared to 2022’s $445.1 million. Sales at its Burger King stores were up 7.2 percent, and Carrols reported a 2.9 percent increase in traffic.
Last year, three major Burger King operators filed for bankruptcy: TOMS King, Premier Kings and Meridian Restaurants Unlimited.
Neither Burger King nor Carrols responded to request for comment.