Burger King gobbles up franchises

Restaurant Brands International (RBI) — a very fake-sounding Toronto-based company that is the very real owner of Tim Hortons and Burger King — just ordered 1,000 juicy franchises. 

What happened: RBI agreed to pay US$1 billion for Carrols Restaurant Group, the largest U.S. franchisee of Burger Kings. In the deal, RBI will buy back 1,022 of its BK franchises across 23 states, in addition to 60 Popeyes locations — another RBI brand.

  • RBI also acquired 70 Burger Kings from bankrupt franchiser Meridian Restaurants last year. RBI will re-franchise locations it has purchased after zhuzhing them up. 

Why it’s happening: Like many a deposed monarch, Burger King is trying to regain its lost glory. Last year, a new CEO instated an aggressive rebranding plan for the chain, including restaurant remodels and, crucially, deciding whether cheese goes on top or below a patty. 

  • Owning franchises makes implementing these changes easier for BK’s bigwigs. Though if they plan to add more hot dogs to the menu, maybe that’s not a good thing.

Why it matters: Fast food has surged coming out of COVID-19. As of October, sales in Canada were ~8% higher than the year before and over 31% higher than five years prior. By buying back franchises, chains can cede control, drive value, and reap the deep-fried rewards. 

Zoom out: Chains like Five Guys and McDonald’s have repurchased franchises as of late, with the Golden Arches flipping them to new operators, which pumps some young blood into its franchising system… and also allows it to charge new, higher franchising fees.—QH