July 20, 2017

Burger King is buying Popeyes

23 February 2017, 12:52 | Ignacio Smith

As Restaurant Brands adds Popeyes to its restaurant business, Peter Costa, president at Empire Executions joins BNN to discuss why this move will likely light a fire under more companies to buy up brands in the sector. Now the RBI executives will turn their attention to Popeyes.

Restaurant Brands was formed in 2014 when 3G Capital-backed Burger King acquired Tim Hortons, the Canadian coffee and doughnut chain, for $11 billion. The company has over 2,600 restaurants in the US and 25 other countries around the world. Almost 98 percent of the brand's locations are franchised. "Unlike Tim Hortons, which was a larger company with significant overhead reduction opportunities, Popeyes' general and administrative expenses appear to offer fewer areas for cost-cutting".

A number of equities research analysts recently commented on the stock. "We view this as unlikely now that RBI is purchasing [Popeyes]".

Popeyes, whose fans include pop singer Beyonce, began 45 years ago as a Southern-fried "Chicken on the Run" restaurant in a New Orleans suburb.

Popeyes has more than 2,600 restaurants around the globe. "That's where you see the savings. Our franchisees have been making a lot more money".

People have taken to social media to share their experiences waiting in long lines, as well as photos of the fast food restaurant's famous fried chicken. 12 Analysts reported that the Price Target for Restaurant Brands International Inc. might touch $60 high while the Average Price Target and Low price Target is $52.25 and $37 respectively. Popeye's leaped to a new high for the year.

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"Popeyes is a powerful brand with a rich Louisiana heritage that resonates with guests around the world".

However, New Jersey fans of the franchise may have much to celebrate.

Cheryl Bachelder, Popeyes' CEO, was pleased with the sale, as well.

The analyst noted this could add about 150 basis points to the company's average annual unit growth, from 4.7 per cent today, to six per cent by 2023. For example, sometimes purchasers of a franchised system increase the price of inventories and supplies and cut overhead that supports the franchisees.

"When culture changes, things can go wrong", Mr. Levitt said.

Several analysts have released their opinion on Popeyes Louisiana Kitchen, Inc. Considering the banner quarter the fast-food operator reported at the same time, a takeover deal isn't such a stretch, and the sources for the rumor say Restaurant Brands has been eyeing other potential candidates as acquisition targets, as well.

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