Burger King-parent Restaurant Brands International Inc said it would buy Firehouse Subs for $1 billion in an all-cash deal as it adds the U.S. sandwich chain to its roster of popular outlets, including Tim Hortons and Popeyes.
The deal would immediately add to Restaurant Brands’ earnings, the company said. Jacksonville, Florida-based Firehouse Subs’ system-wide sales would be about $1.1 billion for 2021, with October U.S. same-store sales about 20% higher from pre-pandemic levels two years ago, Restaurant Brands said.
Restaurant Brands said it planned to fund the deal, expected to close in the coming months, through a combination of cash on hand and debt.
Firehouse Subs will remain based in Jacksonville and will continue to be managed by Don Fox, chief executive officer, and chief financial officer, Vincent Burchianti.
RBI said Firehouse Subs offers significant long-term unit growth potential and expects the transaction will immediately add to RBI’s diluted net earnings per share. RBI plans to fund the transaction using a combination of cash on hand and debt.
Brothers and former firefighters Chris Sorensen and Robin Sorensen founded Firehouse Subs in Jacksonville, Fla., in 1994. Since then, the brand has grown its footprint in the $30 billion US quick-service restaurant category. The brand has increased its number of restaurants three-fold to 1,200 units. System-wide sales are expected to total $1.1 billion for 2021; October year-to-date US comparable sales of 20% over 2019.
Franchisees own and operate 97% of the brand’s restaurants across 46 states, Canada and Puerto Rico. Firehouse Subs is expected to generate roughly $50 million of 2021 adjusted EBITDA.
“Firehouse Subs is a special brand with a talented team, impressive culture and community focus that resonates with guests and closely aligns with our core values at RBI,” said José Cil, CEO of RBI. “We see tremendous potential to accelerate US and international growth at Firehouse Subs with RBI’s development expertise, global franchisee network and digital capabilities. We are excited to welcome the Firehouse Subs team to the RBI family and to continue our ambitious dream of building the world’s most loved restaurant brands.”
The brand brings digital expansion opportunities to RBI with a mobile app including mobile order and pay and loyalty capabilities, in addition to a strong delivery sales mix. The brand’s loyalty program has nearly 3.5 million subscribers, enrolling approximately 50,000 additional customers per month and representing more than 10% of transactions. RBI said the acquisition would augment Firehouse Subs’ capabilities by leveraging RBI’s in-house tech capabilities, engineers and continued investments in digital and technology to accelerate the brand’s digital transition.