Shares of Carrols Restaurant Group (TAST) popped on Tuesday after it announced that it was being acquired for $1 billion by Restaurant Brands International (QSR 1.03%), (RBI) the owner of popular fast-food chains Burger King, Popeyes, Tim Hortons, and Firehouse Subs. For its part, Carrols is the largest Burger King franchisee, with over 1,000 locations. It also owns 60 Popeyes restaurants.

As of 11 a.m. ET, Carrols stock was up by almost 13% on the news, while Restaurant Brands International's stock was down by about 3.1%.

Why Burger King's owner is buying Burger King restaurants

In late 2022, RBI started making urgent decisions to revitalize its business and brand. It brought in J. Patrick Doyle as executive chairman based on his success at engineering a turnaround for Domino's some years ago. And it launched a plan to modernize its restaurant operations and increase advertising spending, among other things.

Following the acquisition of Carrols, RBI intends to remodel around 600 of its restaurants that aren't aligned with its "modern image." This will take time and money, but the company sees it as an opportunity to move its strategic plans forward in a big way. Consider that roughly one out of every seven Burger King locations in the U.S. is owned by Carrols.

What now?

For Carrols' shareholders, there's not much more apparent upside here. The deal is for $9.55 per share, and as of this writing, the stock already trades at $9.52 per share. The two companies have already reached an agreement. Assuming regulatory and shareholder approval, the remaining upside here is modest.

Currently, nearly 100% of Restaurant Brands International's locations are owned and run by franchisees, and it intends to return to that business model in time. It may take five years to update all the locations in Carrols' portfolio. But after that, RBI plans to resell most of them to franchisees.

As such, this acquisition doesn't represent a long-term strategic change for RBI. But it will change the company's financials for a time because revenues from restaurant sales and revenues from franchise fees have drastically different profit margins.