Burger King (TSE:QSR) is Buying Popeyes for $1.8 Billion

Burger King

The company that owns and operates Burger King, Restaurant Brands International (TSE:QSR) is acquiring Popeyes for $1.8 billion, making this one of the largest deals in the fast-food universe in recent times. There have been rumors for a while now that Burger King was eyeing Popeyes.

Restaurant Brands International disclosed they are paying $79 for each share of Popeyes, which is a 27 percent premium over the 30-day average of their stock.

Presently, there are more than 20,000 Burger King stores around the world in about 15,000 locations. The company also owns the Canadian-born coffee chain Tim Hortons, which operates from 4,500 locations. The Atlanta-based Popeyes, on the other hand, has been growing rapidly for many years. Established in New Orleans, they are best known for their Southern-inspired menu, which includes seafood and fried chicken. 97 of their stores are owned by franchisees. However, in recent years, Popeyes has struggled to keep up their growth.

Burger King Adds More Stores, But Is Still Behind Yum Brands

With this acquisition, Burger King will be able to add another 2,600 outlets to their portfolio. After this acquisition, Burger King is likely to push their biscuits and fried chicken even more throughout the world.

But Restaurant Brands International or RBI will still be behind fast-food superpower Yum Brands (NYSE:YUM) that has 40,000 stores around the world and is growing every month. Yum Brands owns Pizza Hut, KFC, and Taco Bell. KFC alone operates from more than 18,000 locations.

RBI issued a statement saying, “We will continue developing the brand at an increasing pace in the U.S. and foreign markets”. Daniel Schwartz, the CEO added, “The key to long-term success at Popeyes will be a focus on guest satisfaction and franchise profitability. The team has done a great job setting the foundation for future growth.” he further stated that the Popeyes is going to be managed independently.

What Will Be the Fate of Popeyes Franchisees?

The CEO did not take any questions, so it was not known whether they are planning to cut any jobs, close any locations, and merge the purchasing operations. No further statement was issued by Restaurant Brands International (TSE:QSR).

On an average, each Popeyes location earns annual revenue of $1.4 million. The average franchisee profitability was $340,000 for each location in 2015. Back in 2008, this was just $188,000, so the business has seen quite a growth.