Restaurant Brands International Inc. ( QSR Quick Quote QSR - Free Report) recently reached an agreement to acquire the sub sandwich chain — Firehouse Subs — in a deal valued at $1 billion. Following the news, the company’s shares gained 2.1% on Nov 15. However, the stock has declined 12.7% in the past six months, against the industry’s growth of 3%. Firehouse Subs will be a new addition to Restaurant Brands’ family of iconic quick service restaurant brands — Tim Hortons, Burger King and Popeyes. The company is quite confident about the acquisition’s long-term prospects. José Cil, CEO of Restaurant Brands 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.” Image Source: Zacks Investment Research
Firehouse Subs, which was founded in 1994 by brothers and former firefighters Chris and Robin Sorensen, has nearly 1,200 locations across the United States. Firehouse Subs is expected to generate $1.1 billion in systemwide sales for 2021. In the first 10 months of 2021, the company’s same store sales increased 20% in comparison to the same period 2019. The buyout is anticipated to be earnings accretive immediately.
Meanwhile, the brand has a robust family of franchises, which owns and operates 97% of the brand's restaurants across 46 U.S. States, Canada and Puerto Rico. Firehouse Subs is likely to generate approximately $50 million of 2021 adjusted EBITDA. Firehouse Subs has a robust digital foundation and a mobile app. The brand’s loyalty program has nearly 3.5 million subscribers. This acquisition will drive Firehouse Subs' competences by leveraging RBI's in-house tech-stack, engineers and continued investments in digital and technology. Restaurant Brands has a Zacks Rank #4 (Sell). Key Restaurant Picks Dave & Buster's Entertainment, Inc. ( PLAY Quick Quote PLAY - Free Report) , which has been benefiting from reopening initiatives, expanding vaccinations and excellent operational execution, sports a Zacks Rank #1 (Strong Buy). Going forward, the company anticipates the momentum to sustain on the back of its strategic initiatives that include new menu, optimized marketing and technology investments. Dave & Buster's has reported better-than-expected earnings in each of the trailing four quarters, the average surprise being 201.8%. The company’s fiscal 2021 earnings is likely to witness growth of 147.7%. PLAY stock has gained 7.4% in the past three months. You can see . the complete list of today’s Zacks #1 Rank stocks here Papa John's International, Inc. ( PZZA Quick Quote PZZA - Free Report) , which flaunts a Zacks Rank #1, has been gaining from strong comparable sales in North America on account of solid customer retention and innovation strategies. The company is continually striving to eliminate barriers to expand in the existing international markets and identify new market opportunities. Papa John's has reported better-than-expected earnings in the trailing three quarters. The Zacks Consensus Estimate for 2021 earnings has been revised upward to $3.34 from $3.14 in the past 30 days. PZZA stock has appreciated 36% in the past six year, compared with the industry’s growth of 3%. Del Taco Restaurants, Inc. has a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 25.7%, on average. Shares of the company have gained 2.7% in the past six months. The Zacks Consensus Estimate for Del Taco Restaurants’ current financial year sales and earnings per share suggests growth of 33.3% and 7.2%, respectively, from the year-ago period.