Happy Friday!

The Bear took home a bunch of Emmys on Monday, including a well-deserved win for Outstanding Comedy Series.

Here’s a hunch: The fact that you’re reading this email means you probably care about restaurants — which also means there’s an extremely good chance you’ll love The Bear. Watch it!

3 Numbers

$530 million

One-time, non-cash impairment charge Red Lobster owner Thai Union has recorded on its investment in the business. (Impairment charges are used by businesses to permanently write off assets that have dropped in value.) Thai Union — which originally bought a 25% stake in Red Lobster in 2016 for $575 million, before later acquiring a controlling stake for an undisclosed sum in 2020 — is now looking to exit the business, citing “prolonged negative financial contributions” to its shareholders.

$1 billion

Amount paid by 7-Eleven for 204 Stripes convenience stores and Laredo Taco Company restaurants. The deal gives 7-Eleven complete ownership of all Stripes -Laredo Taco Company locations across the U.S.

$1.1 billion

Amount Uber paid in 2021 for alcohol-delivery service Drizly, which will be making its final delivery in March. Uber bought Drizly during the height of pandemic-era alcohol delivery sales, but home-delivered booze never quite took off from there. Uber says it will refocus on its core Uber Eats platform, which, like DoorDash, is expanding beyond food to deliver items like groceries and booze.

Burger King’s big-time purchase

Burger King took literally the New Year’s resolution to “invest in yourself”… to the tune of $1.5 billion.

BK parent company Restaurant Brands International (RBI) announced this week that it’s buying its largest franchisee, 1,022-unit Carrols Restaurant Group, for $1 billion, with plans to spend an additional $500 million remodeling roughly 600 of the newly-purchased locations.

RBI says it will complete the remodels by 2028, using cash generated by the Carrols’ locations to finance the work. Afterwards, RBI plans on refranchising many of the restaurants, selling them to local operators of 50 or less locations. It will retain “several hundred” units as corporately-run stores.

In other words, RBI is staking its future success on a system of franchisees that bear little resemblance to Carrols, which owned 15% of all Burger King’s U.S. locations at the time of this deal. After years of encouraging large operators like Carrols to grow their store counts, last year the company signaled that it would begin favoring smaller operators who are regularly in their stores.

The shift in strategy makes sense: Getting big typically means adding on debt, and we’re no longer in a low-interest rate world. There is some evidence too that locally-based franchisees have a tighter grip on store operations, which is an area of emphasis for Burger King (and, really, everyone) in 2024.

That said: a round of applause for Carrols, which deserves credit for an all-time run in the lead-up to this transaction.

In 2022, its debt was downgraded amid overall brand profitability challenges, and it closed the year with a stock price of $1.36. But thanks to strong traffic numbers and a markedly improved EBITDA, Carrols saw its share price rise over 300% in 2023 (making it the best performing restaurant stock for the year). This week, RBI bought the company at a 23% premium over its share price. Kingly.

Quick Hits

• Get ready to hear “I’ll have a #13, Mike’s Way, eh?” Jersey Mike’s is planning a major expansion into Canada. In a press release, the chain announced that it’ll open 300 locations over the next 10 years, with Redberry Restaurants — a large Canada-based restaurant operator — acting as Jersey Mike’s area developer in the country. This marks the first major international push in Jersey Mikes’ 68-year history.

• Not to be outdone, Jimmy John’s also announced this week that it’ll be expanding internationally for the first time. On Wednesday, the chain’s parent company, Inspire Brands, announced two international franchise agreements for Canada and Latin America, covering a yet-to-be-announced number of locations.

• Analysts who cover Toast say that the POS provider is likely to implement price increases on its software services this year, according to an article published by PaymentsDive. Analyst Stephen Sheldon said that Toast has been “signaling this for two quarters,” with the financial impact of the projected mid-single digit increase “likely to pick up progressively through 2024 and into 2025.”

• The House voted to repeal a National Labor Relations Board rule that would treat companies as joint employers of franchised businesses (which means franchisors could be held liable for labor violations committed by their franchisees). The repeal still faces a long road: it next needs to pass the Senate, and, as President Biden is expected to veto the legislation, would later need a 2/3s vote to override the veto.

• Shipley Do-Nuts — a 350-unit, 85-year-old brand acquired by PE firm Peak Rock Capital in 2021 — has had a big couple of years: since Peak Rock bought the chain, it’s increased its average unit volumes by 50% and doubled its online sales. The company says its goal is to double its unit count over the next 5 years.

• Next Level Burger bought Veggie Grill, creating “the largest plant-based only restaurant platform in the U.S.” Veggie Grill had a tough 2023, closing 40% of its footprint in office-centered markets. It joins a Next Level Burger that successfully raised $20 million in funding in 2022.

Name That Chain!

You get three guesses to name this week’s mystery chain:

• This chain’s two founders also double as its namesakes

• Their locations have pretty big footprints — 50,000 square feet at the minimum

• One of their locations featured a Guinness World Record for the longest chain of redemption tickets — 360,000 (which measured 2,913 feet)

Stay tuned… the answer will be in next week’s email.

Last issue’s answer: Chipotle

#Content Recs

• How China became KFC’s most important market.

• In this interview with Bloomberg Intelligence, Potbelly CEO Bob Wright says that he believes franchisees will lead to 10% net unit growth in 2024.

• Two fascinating looks inside Subway from Restaurant Business: the first details the sizable efforts California-based operators are taking to adapt to the state’s minimum wage increase in April. The second is a candid interview with the chairman of the chain’s franchisee association, touching on the Roark deal and the franchise base’s communication with management.

• “Why no one goes out to eat in D.C. anymore.”

International Corner!

In an attempt to spur the imaginations of fast-food R&D departments across America — each week I’ll highlight an international item that should warrant at least some menu consideration in the States.

This week: ARBY’S POTATO CAKES

From The Takeout:

Arby’s Potato Cakes were a criminally underrated side item. As The Takeout mentioned, they were similar to the GOAT fast-food breakfast item (the McDonald’s hashbrown), with the added benefit of being available at 9 p.m.

No word yet on whether these little beauties will ever make it back to the States.