Burger King Franchise Revenue of $1M+ worth the high Franchise Cost?

Image of Burger King store


You probably have heard of big name restaurant franchises such as Taco Bell and Olive Garden, but who actually owns these companies? Restaurant businesses can take many forms — they can be publicly traded, with the majority of units company owned, like Starbucks. They can also be franchised concepts with a majority of restaurants owned and operated by franchisees.

Did you know that companies can be franchisees as well? Not all franchisees are individuals, there are corporations that are set up for the purpose of owning and operating thousands of restaurants. One such corporation is Carrols Restaurant Group. You may have never heard of them, but you probably have heard of the restaurant brands that they own — Burger King and Popeyes.

Carrols Restaurant Group is a restaurant franchise corporation that is also the largest Burger King franchisee in the world, and according to their website, they currently own and operate over 1,000 restaurants under the Burger King and Popeye brand names. At the same time, Carrols Restaurant Group is a publicly traded company, meaning that it is listed on the stock market under the ticker symbol $TAST.

As an individual investor, on the surface it may seem as if you do not have a lot in common with large corporations like Carrols Restaurant Group. But looking at this franchisee’s financials can provide valuable insight into the success of the franchisor in the industry, as well as projected revenues, costs, and profits. Keep reading to find an in depth analysis of Carrols Restaurant Group and what their stake in Burger King means for interested investors.

Image of sample Burger King Food

Burger King Franchise Cost, Revenue and Profit: Quarterly Earnings (Q1 2021)

Carrols Restaurant Group is one of the largest restaurant franchisees in North America. It currently operates 1,010 Burger King restaurants in 23 states as well as 65 Popeyes restaurants in seven states. Carrols has been operating Burger King franchises since 1973 and Popeyes restaurants since 2019. Below is a chart of their income statement for Q1, as well as some key takeaways.

Quarterly Earnings (in thousands)

 Three Months Ended
April 4, 2021March 29, 2020
Restaurant Sales$ 389,993$ 351,558
Costs and Expenses  
Cost of Sales$ 113,790$ 102,297
Restaurant Wage and Related Expenses$ 129,646$ 124,575
Restaurant Rent Expense$ 30,314$ 29,454
Other Restaurant Operating Expenses$ 61,419$ 57,978
Advertising Expenses$ 15,369$ 13,876
General and Administrative Expenses$ 21,369$ 20,787
Depreciation and Amortization$ 20,609$ 21,031
Impairment and Other Lease Charges$ 353$ 2,881
Other expenses, net$ 227$ 56,787
Total Costs and Total Expenses$ 393,096$ 373,565
Loss from Operations$ (3,103)$ (22,047)
Interest Expense$ 6,726$ 7,140
Loss before income taxes$ (9,829)$ (29,187)
Benefit from income taxes$ (2,661)$ (9,978)
Net loss$ (7,168)$ (22,209)
Basic and diluted net loss on share$ (0.14)$ (0.44)
Basic and diluted weighted average shares outstanding$ 49,824$ 50,821

Supplemental Information (in thousands)

 Three Months Ended
April 4, 2021March 29, 2020
Burger King Restaurant Sales$ 368,488$ 329,637
Popeyes restaurant sales$ 21,505$ 21,881
Total Revenue$ 389,993$ 351,518
Change in comparable Burger King restaurant sales14.7%(5.7)%
Change in comparable Popeyes restaurant sales0.5%—-
Average weekly sales per Burger King restaurant$ 28,094$ 24,614
Average weekly sales per Popeyes restaurant$ 25,458$ 25,978
Adjusted Restaurant level EBITDA$ 39,484$ 22,797
Adjusted Restaurant level margin10.1%6.5%
Adjusted EBITDA$ 19,866$ 3,972
Adjusted EBITDA margin5.1%1.1%
Adjusted Net Loss$ (6,500)$ (19,317)
Adjusted Diluted Net Loss per share$ (0.13)$ (0.38)
Number of Burger King Restaurants  
Restaurants at beginning of period1,0091,036
New restaurants (including offsets)23
Restaurants closed (including offsets)(1)(11)
Restaurants at end of period1,0101,028
Average Number of Burger King resaurants1,009.001,030.20
Number of Popeyes restaurants  
Restaurants at beginning and end of period6565
Average number of operating Popeyes restaurants65.064.8

In Q1 of 2021, total restaurant revenue increased 10.9% to $390 million, compared to $351.5 million in Q1 of 2020. At the same time, comparable restaurant sales for Burger King increased by 14.7%, in contrast to the 5.7% decrease experienced in last year’s first quarter. 


Burger King makes up the majority of Carrols total restaurant sales, constituting 94.5% in the first quarter. Although revenue increased in Q1, expenses increased as well, from $20.8 million in Q1 2020 to $21.4 million in Q1 2021. Another important metric to look for in a company’s financial statement is their EBITDA, or their earnings before interest, taxes, depreciation, and amortization. There was a significant jump in Carrol’s EBITDA in Q1, from $4.0 million in Q1 2020 to $21.4 million in 2021. In 2020, Carrols lost a lot of their franchises, decreasing from 1,036 restaurants in the beginning of Q1 to 1,028 at the end for a net loss of 8 restaurants in just one quarter. However, for 2021, Carrols was able to retain all of their restaurants from the beginning of the quarter. 

Top Burger King Franchisee Makes Over $20 million in Profits: Annual Report

Despite the economic downturn brought about by the COVID 19 pandemic, Carrols Restaurant Group proved their resilience throughout the fiscal year of 2020, as top line restaurant sales grew by 6.5% to about $1.5 billion, thanks in part to their large scale acquisition activity in 2019. 


There was only a modest decline in comparable restaurant sales for both Burger King and Popeyes, 2.8% and 0.1% respectively. Furthermore, their delivery platform served as an important success factor, going from contributing nothing to approximately 5% of restaurant sales by the end of 2020. At the same time, Carrols was able to dramatically improve their operating margins in 2020, increasing their Adjusted Restaurant Level EBITDA by almost $25 million and Adjusted EBITDA by just over $20 million


The following charts are a modified version of the financial statements provided by the annual report, and what they indicate about the financial health of the largest franchisee of Burger King. 

Annual Earnings: Income Statement

(thousands of dollars)
January 3, 2021December 29, 2019December 30, 2018
Restaurant sales$ 1,547,502$ 1,452,516$ 1,179,307
Other revenue—-10,249—-
Total revenue1,547,5021,462,7651,179,307
Costs and Expenses   
Restaurant Wages and Related Expenses$ 498,127$ 485,278$ 382,829
Restaurant Rent Expense$ 118,444$ 107,147$ 81,409
Other Restaurant Operating Expenses$ 236,059$ 227,364$ 178,750
Advertising Expenses$ 60,735$ 58,689$ 48,340
General and Administrative Expenses$ 84,051$ 84,734$ 66,587
Depreciation and Amortization$ 81,727$ 74,674$ 58,468
Impairment and Other Lease Charges$ 12,778$ 3,564$ 3,685
Other income(1,271)(1,911)(424)
Total Operating Expenses$ 1,543,388$ 1,471,508$ 1,145,952
Income (Loss) from Operations$ 4,114$ (8,743)$ 33,355
Interest Expense$ 27,283$ 27,856$ 23,638
Gain on bargain purchase—-—-$ (230)
Loss on extinguishment of debt—-$ 7,443—-
Income (Loss) before income taxes$ (23,169)$ (44,042)$ 9,947
Provision (benefit) for income taxes$ 6,294$ (12,123)$ (157)
Net income (loss)$ (29,463)$ (31,919)$ 10,104
Basic and diluted net income (loss) per share$ (0.58)$ (0.74)$ (0.22)
Weighted average common shares outstanding   
Basic$ 50,751,185$ 43,421,715$ 35,715,372
Diluted$ 50,751,185$ 43,421,715$ 45,319,971
Comprehensive income (loss), net of tax   
Net income (loss)$ (29,463)$ (31,919)$ (10,104)
Other comprehensive income (loss)$ (5,284)$ (1,268)$ 564
Comprehensive income (loss)$ (34,747)$ (30,651)$ (10,668)

 Annual Cash Flows Statement

(thousands of dollars)
April 4, 2021March 29, 2020March 29, 2020
Cash flows from operating activities   
Net income$ (29,463)$ (31,919)$ 10,104
Adjustments to reconcile net income to net cash provided by operating activities   
Loss (gain) on disposals of property and equipment(994)(74)312
Stock based compensation5,2235,7535,812
Gain on bargain purchase—-—-(230)
Impairment and other lease charges12,7783,5643,685
Depreciation and amortization81,72774,67458,468
Amortization of deferred financing costs2,1701,6941,202
Amortization of bond premium and discount on debt539(80)(913)
Amortization of deferred gains from sale-leaseback transactons—-—-(1,584)
Deferred income taxes6,026(11,982)(483)
Non-cash loss on extinguishment of debt—-129—-
Changes in other operating assets and liabilities   
Refundable income taxes115(284)55
Trade and other receivables(6,417)(523)(2,275)
Accounts payable(5,927)1,196(926)
Accrued interest(245)(2,917)146
Accrued payroll, related taxes and benefits18,103(538)2,084
Other liabilities10,9932383,998
Changes in operating right of use assets and operating lease liabilities, net10,1963,980—-
Net cash provided by operating activities103,94548,70880,769
Cash flows used for investing activities   
Capital expenditures   
New restaurant development(17,824)(53,596)(23,171)
Restaurant remodeling(15,317)(50,383)(31,951)
Other restaurant capital expenditures(13,064)(18,922)(15,726)
Corporate and restaurant information systems(10,685)(11,978)(4,887)
Total capital expenditures(56,890)(134,879)(75,735)
Acquisition of restaurants, net of cash acquired—-(130,646)(38,102)
Proceeds from insurance recoveries2,071323642
Properties purchased for sale-leaseback(15,537)(1,207)(2,123)
Proceeds from sale-leaseback transactions22,49948,3648,424
Net cash used for investing activities(47,857)(218,045)(106,894)
Cash flows from financing activities   
Proceeds from issuance of Term Loan B and B-1 Facilities71,250422,875—-
Repayments of Term Loan B and B-1 Facilities(4,625)(2,125)—-
Retirement of 8% Senior Secured Second Lien Notes—-(280,500)—-
Borrowings under prior revolving credit facility—-—-17,000
Repayments under prior revolving credit facility—-—-(17,000)
Borrowings under revolving credit facility150,000436,000—-
Repayments under revolving credit facility(195,750)(390,250)—-
Payments on finance lease liabilities(1,617)(2,170)(1,811)
Proceeds from lease financing obligations—-—-2,692
Costs associated with financing long-term debt(3,303)(11,516)(154)
Purchase of treasury shares(10,053)(4,017)(—-)
Net cash provided by financing activities5,902168,297727
Net increase (decrease) in cash and cash equivalents61,990(1,040)(25,398)
Cash and cash equivalents, beginning of period$ 2,974$ 4,014$ 29,412
Cash and cash equivalents, end of period$ 64,964$ 2,974$ 4,014
Supplemental disclosures   
Interest paid on long-term debt$ 24,714$ 29,055$ 23,098
Interest paid on lease financing obligations$ 104$ 104$ 105
Accruals for capital expenditures$ 1,241$ 15,062$ 7,605
Common stock issued for consideration in acquisition(—-)($ 145,333)(—-)
Non-cash reduction of lease financing obligations—-—-$ 2,538
Income taxes paid (refunded) net$ 153$ 144$270

Although Carrols had relatively impressive revenue numbers, they are surprisingly NOT a profitable company as measured by net income. Their net income since 2019 has been at a loss, although in 2020 they were able to minimize this loss by a few million dollars. So why is their net income at a loss? For one thing, Carrols has very high total operating expenses, which takes a huge chunk out of their original earnings. For example, looking at 2020, they made a little over $1.5 billion in total revenue, specifically $1,547,502,000. But total operating expenses amounted very close to this number, at 1,543,388,000

Burger King Franchisee makes less than 1% profit margin in 2021

Income after operations expenses is only $4,000,000, a measly number compared to how much they brought in originally. Interestingly enough, Carrols Restaurant Group still recorded positive cash flow, indicating an increase in the company’s liquidity. However, looking at the modified cash flow statement above, it becomes clear that the reason why Carrols Restaurant Group has such a high cash flow relative to their net income is because they borrowed money from a credit facility — this is what “issuances” and “borrowing” means in the above statement.

Comparison to Average Burger King Franchisee

One possible reason for the lack of profitability of Carrols Restaurant Group is that Burger King is an expensive franchise concept. When analyzing Burger King’s 2020 FDD, the estimated total initial investment for a traditional Burger King facility ranged from $1.8 million to $3.3 million. In comparison, for traditional franchise owned Burger King restaurants, mean average sales were slightly below this initial investment fee, at $1.4 million. However, this does not mean that one should avoid a Burger King investment entirely. After all, the estimated initial investment contains many one time fees, so even if investors are unable to make a profit the first year, that does not mean this will be a trend for future years. According to Vetted Biz analysis, their franchise failure rate is on the lower end, at 6.3%. This means that the vast majority of franchises have the financial means to survive.

Are you thinking about investing in a Burger King franchise, or interested in exploring more options? Make sure to check out Vetted Biz’s website for listings of other similar franchises in the burger, fast food, and Food and Beverage industry. 

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