Carrols Restaurant Group Inc., Burger King’s largest franchisee, has agreed to purchase 64 restaurants from subsidiaries of franchise operator Heartland Food LLC for about $18 million, the company said Friday.
Syracuse, N.Y.-based Carrols operates 583 Burger King restaurants in 13 states. The acquisition would add several new markets to its portfolio, including 27 units in Nashville, Tenn.; 11 units in Springfield, Ill.; 15 units in Terre Haute, Ind.; seven units in Evansville, Ind.; and four units in other nearby markets.
The 64 restaurants are among 100 Burger King locations Carrols expects to acquire this year. The company said it will continue to evaluate additional buying opportunities. Carrols raised $67 million in an equity offering in April with further expansion in mind.
Earlier this year, the company acquired 21 restaurants in the Rochester, N.Y., area and Western New York State from Kessler Group Inc. Carrols also picked up eight Burger King units in Pittsburgh and Fort Wayne, Ind.
Carrols chief executive Daniel Accordino said in a statement that the addition is “consistent with our stated strategy to enhance shareholder value through our expanding ownership within the Burger King system.”
In 2012, Carrols acquired 278 units that were corporate-owned, a move that nearly doubled the size of the franchise group. As part of the deal, Carrols also agreed to remodel 450 of its Burger King restaurants.
For its June 29-ended second quarter, Carrols posted a narrowed loss of $1.9 million, or 6 cents per share, compared with a net loss of $3.5 million, or 15 cents per share, a year ago.
Restaurant sales declined 2 percent, to $168.6 million, on same-store sales that also dropped 2 percent, though the company said comps were improving and turned positive in July.
Accordino blamed the weaker-than-anticipated trends on a reduction in ad spending after non-renewal of the franchisor’s matching contribution.
Carrols also remodeled only half the number of restaurants that were reimaged in the first half of 2013. Accordino said the company will accelerate its reimaging efforts in the second half of 2014.
Earlier this month, Bloomberg reported that private-equity firm Blackstone Group L.P. is seeking a buyer for Heartland Food Corp., the second-largest Burger King franchise group.
The Downers Grove, Ill.-based franchisee owns about 330 Burger King units in eight Midwestern states.
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