Restaurant Brands Buys Firehouse Subs for $1B

Restaurant Brands International (QSR) announced Monday that it has acquired U.S. fast-food chain Firehouse Subs for $1 billion in cash, immediately accretive to RBI’s diluted net earnings per share.

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Growing Player in Fast-Food Industry

Firehouse Subs was founded in Jacksonville, Florida, in 1994 by brothers and former firefighters Chris and Robin Sorensen. RBI, the Toronto company behind Tim Hortons, Burger King, and Popeyes, says the sandwich restaurant is a strong and growing player in the fast-food industry, with substantial potential for long-term growth.

Firehouse Subs has tripled its number of restaurants to around 1,200 locations since 2010, while its sales have quadrupled to around $1.1 billion expected in 2021.

Firehouse Subs benefits from a strong family of franchisees who own and operate 97% of the brand’s restaurants in 46 U.S. states, Canada, and Puerto Rico. (See Insiders’ Hot Stocks on TipRanks)

CEO Commentary

Restaurant Brands CEO José E. Cil said, “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. We see tremendous potential to accelerate U.S. 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.”

Wall Street’s Take

On October 28, RBC Capital analyst Christopher Carril reiterated a Buy rating on QSR and a price target of C$87. This implies 19.6% upside potential.

The rest of the Street is cautiously optimistic about QSR, with a Moderate Buy consensus rating based on eight Buys and 10 Holds. The average Restaurant Brands International price target of C$89 implies 22.3% upside potential to current levels.

TipRanks’ Smart Score

QSR scores a 4 out of 10 on the TipRanks Smart Score rating system, indicating that the stock returns are likely to be in line with the overall market.