Franchisee-owned Burger King outlets trail corporate stores, yet Burger King pushes forward with refranchising at an increased rate.
Burger King is transferring ownership of a significant number of its restaurants to smaller, local franchisees, as part of its "Reclaim to Flame" plan. The move, which involves refranchising stores that were acquired from Carrols Restaurant Group, is aimed at accelerating growth, improving operations, and boosting profitability in the U.S. market.
The strategy is expected to bring about several benefits, including accelerated transformation and growth, improved operational quality, and increased sales and profitability. By selling remodeled stores to strong local operators who are more involved in daily operations, Burger King believes these smaller operators will be more engaged and focused on service improvements, leading to better management and performance at the restaurant level.
The decision to refranchise the Carrols restaurants was made two years ahead of schedule, with the aim of speeding up the brand’s turnaround and simplifying its business model. Since the acquisition, the 1,000 locations have generated 2.9% same-store sales growth. In the second quarter of 2025, Burger King reported 1.5% same-store sales growth, with the refranchising process contributing to this growth.
The refranchising process also helps Burger King rebuild a healthier, more competitive franchise system. This is in response to past franchisee bankruptcies, allowing the company to establish a system with operators who are aligned with its standards and growth ambitions.
In addition to the refranchising, Burger King is investing heavily in the chain, spending over $2 billion to fix it. This includes the Carrols acquisition, remodel incentives, marketing spending, and planned store fixes for Carrols. The company's restaurants in China are also performing above expectations.
Burger King is also taking steps to encourage strong performance and reward its employees. The company has started a new program called Crown Your Career, which takes high-potential talent at its stores and helps them move into store ownership over a one- to three-year period. By steering high-performing workers into ownership, Burger King is giving them something to work for and encouraging them to strive for excellence.
Stores rated "A" on Burger King's scale generate 70% higher store EBITDA than the system average, highlighting the importance of strong operations led by great restaurant general managers. RBI CEO Josh Kobza stated that the Carrols restaurants are a "great example of the importance of having strong operations led by great restaurant general managers."
While Burger King plans to maintain a sizable amount of store ownership in the future, it has no plans to operate all locations. The company first had to take over the restaurants and show what can be done when they're operated successfully, which it did with Carrols and Burger King China. Burger King is now starting to take a similar approach with its chicken chain Popeyes.
In Miami, the 47 locations owned by Burger King generated double-digit same-store sales. Burger King's Executive Chairman Patrick Doyle stated that the restaurants in Miami have never been as profitable. As a franchise, it is important for Burger King to have the capability to step into situations and fix things or push them back on the right track.
In conclusion, Burger King’s refranchising of Carrols units is a strategic move to optimize franchise ownership, enhance local management, and drive sustainable growth through targeted investments in remodeling, operations, and franchisee quality. The company expects this to create a stronger, more profitable restaurant system over the next several years.
The refranchising of Carrols Restaurant Group's units is a strategic step towards optimizing franchise ownership within the restaurant industry, by fostering local management and driving growth through targeted investments in remodeling, operations, and franchisee quality. This move towards franchising is aimed at creating a stronger, more profitable restaurant system in the long run.
Burger King's investment in its chain, including the Carrols acquisition, remodel incentives, marketing spending, and planned store fixes, is not only aimed at boosting profitability but also at rebuilding a healthier, more competitive franchise system, which aligns with its standards and growth ambitions.
