| 30 November 2021, Tuesday |

Burger King parent to buy Firehouse Subs for $1 bln as other brands drag

Restaurant Brands International Inc, parent company of Burger King, announced on Monday that it would purchase Firehouse Subs for $1 billion, at a time when its popular brands are struggling due to increased competition from rivals launching new menu items.

Analysts believe Popeyes, owned by Restaurant Brands, has been harmed by the introduction of similar items by McDonald’s Corp and Yum Brands Inc’s (YUM.N) KFC, while Burger King has underperformed in recent months due to weak demand for its lower-priced menu items.

Comparable sales in the United States fell 1.6 percent at Burger King and 4.5 percent at Popeyes in the third quarter ended Sept. 30.

Firehouse Subs, on the other hand, reported a 20% increase in U.S. same-store sales from pre-pandemic levels between January and October, according to Restaurant Brands.

The company’s U.S.-listed shares, which also own Tim Hortons, rose marginally after the company said the deal would immediately boost its earnings once it closed in the coming months. It also stated that the acquisition will be paid for with cash on hand and debt.

“(We) have kept a close eye on it (Firehouse Subs) over the years,” Restaurant Brands Chief Executive Officer Jose Cil told Reuters.

Firehouse Subs franchisees own and operate 97 percent of the company’s 1,200 locations in 46 states, Canada, and Puerto Rico. Restaurant Brands operates approximately 27,000 stores in over 100 countries.

“There’s a ton of room for growth here in the United States, Canada, and all over the world,” Cil said of Firehouse Subs, known for its “Hook & Ladder” sub.

According to Restaurant Brands, Firehouse Subs’ loyalty program has 3.5 million subscribers and is adding around 50,000 new customers per month, following the launch of similar programs by Burger King and Popeyes earlier this year.

Don Fox, the CEO of Firehouse Subs, and Vincent Burchianti, the finance director, will oversee the company’s day-to-day operations.