The Latest 2024 AI Trend: Corporate Buyouts of Restaurant Franchises?
Fast food companies have long relied on franchising (offloading the operation of stores to smaller independent business owners to collect royalty payments from those store owners) to maximize growth and profitability. But when big sweeping changes occur in the economy, major brands may have limited ability to sway how much change those franchisees make at their respective stores.
The restaurant industry has been presented with new challenges in the wake of the pandemic, but new technological tools (including AI) are now being used to bolster their operations. A push to totally overhaul stores -- including tech-powered restaurant equipment -- has led Burger King's parent company to acquire its largest franchisee. Restaurant Brands International (NYSE: QSR) (owner of Burger King, Popeyes, Tim Horton's, and Firehouse Subs) is acquiring Carrols Restaurant Group (NASDAQ: TAST) -- owner of over 1,000 Burger King restaurants and 60 Popeyes -- for a "whopping" $1 billion.
The acquisition is part of Burger King's "Reclaim the Flame" overhaul announced in late 2022. It plans to give Carrols' Burger King stores a facelift and invest $500 million in 600 building remodels in need of a refresh. More importantly, though, "Reclaim the Flame" is also about dumping money into tech-powered kitchen equipment, connected restaurant experiences (ordering via an app and digital kiosks), advertising, and an overall push for better operational efficiency (read "more restaurant-level profits"). Over the next five years, these refreshed locations will be sold back to local franchisees.
Source Fool.com
