Reuters — Tim Hortons parent Restaurant Brands International said Monday it will buy sandwich chain Firehouse Subs for US$1 billion, at a time when its popular brands are struggling due to increased competition from rivals launching new menu items.
Analysts have said fried chicken sandwich pioneer Popeyes, owned by RBI, has been hurt by McDonald’s and KFC launching similar items, while RBI-owned Burger King has underperformed in recent months on weak demand for its lower-priced menu items.
U.S. comparable sales at Burger King declined 1.6 per cent, and slipped 4.5 per cent at Popeyes in the third quarter ended Sept. 30.
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Firehouse Subs, in comparison, reported U.S. same-store sales growth of 20 per cent from pre-pandemic levels between January and October, Restaurant Brands said.
RBI’s U.S.-listed shares rose marginally after it said the deal would immediately add to its earnings once it closes in the coming months. It also said it will fund the acquisition through cash on hand and debt.
“(We) have kept an eye on it (Firehouse Subs) from a distance over the years,” RBI CEO Jose Cil told Reuters.
Jacksonville-based Firehouse’s franchisees own and operate 97 per cent of its 1,200 restaurants across 46 U.S. states, Puerto Rico and, since 2015, Canada.
Firehouse so far has just 48 Canadian stores, all in Ontario, run by franchisee Onfire Restaurants. The chain’s online listing of regions available to new franchisees shows all 10 provinces and three territories as having “no current availability.”
RBI, meanwhile, has about 27,000 stores in over 100 countries.
“There’s a tonne of room for growth here in the U.S. and Canada, and all around the world,” Cil said about Firehouse Subs, which is popular for its “Hook + Ladder” sub.
Firehouse Subs’ loyalty program has 3.5 million subscribers, and is adding around 50,000 more customers per month, said RBI, which earlier this year saw Burger King and Popeyes launch similar programs.
Firehouse Subs CEO Don Fox and finance head Vincent Burchianti will manage its day-to-day operations.
— Reporting for Reuters by Praveen Paramasivam in Bangalore. Includes files from Glacier FarmMedia Network staff.
