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Burger King parent buying largest franchisee in $1 billion deal

By Jake Beardslee · January 16, 2024

In brief…

  • Restaurant Brands buying largest Burger King franchisee Carrols for $1 billion
  • Carrols runs over 1,000 Burger Kings and 60 Popeyes in 23 states
  • Burger King plans to renovate 600 restaurants and refranchise them in 5-7 years
  • Deal needs approval from majority of Carrols shareholders
  • Restaurant Brands stock dipped, but Carrols jumped 13% on news
Restaurant Brands is acquiring top Burger King franchisee Carrols for $1 billion in order to renovate restaurants and accelerate growth.  Dinkun Chen/Wikimedia

Burger King is moving to take over its largest franchisee in the U.S. in a deal worth about $1 billion. Restaurant Brands International Inc., the parent company of Burger King, announced Tuesday that it will acquire all outstanding shares of Carrols Restaurant Group Inc. that it does not already own for $9.55 per share, according to ABC News.

Carrols operates 1,022 Burger King restaurants in 23 states and also runs 60 Popeyes restaurants. According to Tom Curtis, president of Burger King U.S. and Canada, the company plans 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.”

The acquisition is part of Burger King’s strategy to accelerate sales growth and increase franchisee profitability. Burger King plans to invest around $500 million to renovate about 600 of the Carrols restaurants, using Carrols’ operating cash flow to fund the renovations. The goal is to refranchise the acquired restaurants within five to seven years, while keeping a couple hundred company-owned locations.

The deal includes a 30-day “go shop” period where Carrols can seek out alternative buyout proposals. It still needs approval from a majority of Carrols stockholders, excluding Restaurant Brands shares, as well as a majority of all outstanding Carrols stock.

Restaurant Brands is set to report full-year 2023 earnings next month. In Q3, the company exceeded Wall Street projections with $252 million in profit. The company’s shares hit a 52-week high earlier this month. While Restaurant Brands stock was down slightly ahead of Tuesday’s opening bell, Carrols shares jumped nearly 13% on news of the acquisition.