Burger King splashes out $1 billion for its largest franchisee in an attempt to ‘Reclaim the Flame’ after lagging during COVID

“Burger King U.S. has been a laggard in terms of guest experience, and just how modern their franchise locations are relative to their peers,” CFRA research analyst Siye Desta told Fortune. Indeed, Burger King U.S. executives have previously lamented the chain’s lagging customer numbers, admitting to CNN they fell behind competitors during the pandemic and sometimes overcomplicated the ordering experience. In 2020, Burger King dropped behind Wendy’s into third place on the list of America’s best-selling fast-food burger chains and still hasn’t reclaimed its previous second-place standing.

However, the company has seen “some positive signs with their Reclaim the Flame plan,” a bid to modernize its footprint. Those early positive signs may have prompted this acquisition of Carrols to accelerate the plan, Desta said. “They would just like to give Burger King U.S.’s restaurant portfolio more of a modern image, given the amount of remodels their competitors, like McDonald’s, have done already,” he argued.

That’s where Carrols comes in. BK’s largest franchisee has consistently had better foot traffic than its parent company. RBI’s foot traffic was flat for the third quarter of last year (the most recent figures available), while Carrols’ posted rising traffic for its last two quarters. Andrew Charles, an analyst with TD Cowen investment bank, told the Associated Press that Carrols is a superior operator with sales that have historically outperformed Burger King overall. 

Buying Carrols’ is a bid to…