Restaurant Brands CEO on $1.1 billion Firehouse Subs deal: Everyone loves a good sandwich
Restaurant Brands CEO Jose Cil is all in on meaty subs.
On Monday, Cil pulled the trigger on his first major acquisition since taking over as CEO in 2019 by plunking down $1.1 billion to acquire Firehouse Subs. The brand will join Burger King, Tim Horton's (acquired in 2014) and Popeyes (acquired in 2017) under the Restaurant Brands umbrella.
A key consideration in the deal, Cil tells Yahoo Finance Live, is the consumer affinity for sub sandwiches.
"Subs are great. I think they are very comforting food and people in the U.S. and beyond are very accustomed to them. It forms part of the daily routines of many Americans and many around the world. And so it's a big category in the quick-service restaurant space."
Added Cil on Firehouse Subs in particular, "They have a great-tasting product. Their portions are quite substantial. And the product quality is exceptional."
The financials of Firehouse Subs look substantial, too.
Firehouse is projected to generate $1.1 billion in sales and $50 million in adjusted operating profits in 2021, according to Restaurant Brands. The chain numbers 1,200 stores, mostly in the United States.
Cil will look to accelerate new restaurant openings for Firehouse Subs, especially overseas.
"Strategically, we like Restaurant Brands entrance into a large and firmly established limited service menu category, and in general, we also think that this acquisition is a good use of capital," said Deutsche Bank analyst Brian Mullan in a note to clients.
Mullan reiterated a Buy rating on shares of Restaurant Brands. Shares are down 5% year-to-date as the company works through a turnaround at Burger King.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, YouTube, and reddit
