🍔 Restaurant Brands International to Acquire Largest Burger King Franchisee in the U.S.

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Restaurant Brands International to Acquire Largest Burger King Franchisee in the U.S. (Read More)

ACQUISITION: Restaurant Brands International acquires Carrols Restaurant Group, the largest Burger King franchisee in the United States, in a $1.0 billion deal.

Accelerating Remodels: The acquisition will accelerate restaurant remodels as part of Restaurant Brands' "Reclaim the Flame" plan to drive sales growth and franchisee profitability.

• Size and Sales: Carrols operates 1,022 Burger King restaurants in 23 states, generating approximately $1.8 billion in system sales.

• Additional Ownership: Carrols also owns and operates 60 Popeyes restaurants in six states.

Remodeling Strategy: Restaurant Brands plans to invest $500 million to remodel and modernize approximately 600 acquired restaurants and subsequently sell them to local franchise groups.

Refranchising Goals: The plan includes refranchising the acquired restaurants within the next five to seven years, maintaining a strategic portfolio of a few hundred company-owned restaurants for innovation and development purposes.

Burger King Locations

🧠 EDITOR’S THOUGHTS

Burger King is the second largest fast food hamburger chain globally, operating over 19,000 locations in 100 countries and U.S. territories, with independent franchisees owning almost 100% of the restaurants.

Much like other quick-service restaurant (QSR) operators, Burger King favors locations in high-traffic areas with excellent accessibility. Typically, their buildings span 3,000 to 4,000 square feet, equipped with a drive-thru window, and are situated on 0.5 to 1.5 acres of land.

It's crucial to recognize that the majority of Burger King locations operate as franchises, leading to a variety of lease agreements and guarantors under the Burger King brand. Corporate-backed leases are trending toward 10-15 year ground leases, featuring rent increases of 8% - 10% every five years. Franchise guaranteed lease terms and respective cap rates vary based on the perceived creditworthiness of the operator. In instances where a site possesses high-quality real estate and strong sales, some leases may include annual rent increases or percentage rent.

Burger King derives its revenues from three main sources: retail sales at company-operated restaurants, franchise revenues, and property income from restaurants that BKH leases or subleases to franchisees.

📝 NET LEASE BEAST SHEET

TRIPLE NET TENDIES

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NET LEASE NUGGIES

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• Black Bear Diner plans for expansion and growth in 2024. The California-based restaurant chain is set to open around 14 new locations this year, with potential expansion into new markets by 2025. CEO Anita Adams is considering opportunities in Florida, while also recognizing the potential for growth in Texas. Black Bear Diner's off-premises business has increased significantly, contributing to higher average unit volumes and driving the need for investments in packaging and technology. Despite higher construction costs, the company aims to maintain conservative growth and position itself as a nationwide brand. (Read More)

• Rite Aid to Sell Off Eight Store Leases in Multiple States Pending court approval, Rite Aid plans to sell eight store leases across Pennsylvania, Washington, New York, New Hampshire, Maryland, Massachusetts, and California. The properties, managed by A&G Real Estate Partners, include fee-owned buildings and land, with sizes ranging from 10,237 to 22,782 square feet. In addition to drive-thru lanes, many of the listings have easements to adjacent retail centers and long-term lease agreements. Rite Aid aims to strengthen its financial position and reduce rent expenses through these sales. (Read More)

BEAST TWEETS x POSTS

🐦 Michael Moreno: Brokers! - be careful who you are selling your deals to….

🦅 Kendall Whitaker: Of the most poorly located QSR sites, many are Burger King’s….

🦢 Ben Little: This one stupid mistake is going to cost that business literal millions of dollars, assuming it survives at all…

🦆 Max DeMarco: How Japan Became the Poorest Country in The World…

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