Carrols decelerates BK buying spree

Carrols Restaurant Group, the world’s largest franchisee of Burger King with 675 locations in the United States, has been on another buying spree in 2014 through the end of the third quarter, but officials said no other major acquisitions are pending in the near term. While some industry watchers have speculated that Carrols could be a player in the expansion of the Tim Hortons brand in the United States once its merger with Burger King gets off the ground, the Syracuse, New York-based company has been plenty content to keep adding Burger King locations to its portfolio by buying units from other franchisees. Carrols has acquired 123 Burger Kings in 2014, including 94 units in October and November, covering North Carolina, Tennessee, Illinois and Indiana. During the company’s third-quarter earnings call Wednesday, Paul Flanders, chief financial officer for Carrols, said the company would focus on shoring up operations at the newly acquired Burger King units before turning toward more megadeals or diversifying into another brand. “Our focus here in the short term clearly has to be on integrating and improving the P&L metrics on the units we just acquired — in the past three weeks we’ve acquired almost 100 stores,” he said. “Maybe we’ll do some smaller deals between now and a refinancing, but you won’t see us doing anything large between now and then.” For the Sept. 28-ended third quarter, Carrols reported a net loss of $1.7 million, or negative 5 cents per diluted share, compared with a $2.8 million net loss, or negative 12 cents per diluted share, a year earlier. As with the third quarter of 2013, the most recent period included charges for acquisition and integration of restaurants that resulted in a net loss. Carrols’ revenue increased 6.8 percent to $179.8 million, which included the sales from 29 Burger Kings that were acquired this year. Same-store sales rose 3.3-percent during the period. Chief executive Daniel Accordino noted that Carrols’ comparable sales comprised an 8-percent increase in average check, offset by a 4.7-percent decrease in customer traffic, both of which were explained by a shift toward fewer aggressive, low-price promotions in this year’s third quarter compared with the same period in 2013. Accordino said turning around negative traffic trends would depend on the national marketing calendar for Burger King, adding that the $1.49 promotion for a 10-piece chicken nugget order had a positive effect on traffic in October while the brand’s 2 for $5 menu kept the average check from falling too much. “The fourth-quarter marketing calendar will continue to be aggressive,” he said. “We think [fourth quarter] and the first part of 2015 will be a good mix of traffic-generating tactics as well as continuation of the 2 for $5 menu.”