Let’s make a deal

In December 2020, Inspire Brands closed its $11.3 billion acquisition of Dunkin’ Brands, becoming the second-largest restaurant company in the U.S. in terms of sales and locations. It was the highest-dollar deal since 2014, when Tim Hortons was bought for $12.64 billion by 3G Capital LP, Burger King Worldwide Inc.

As it turns out, the move was a sign of things to come. While 2020 was the time for pivots and adjustments, 2021 was the year to capitalize on opportunities. 

Restaurants and private-equity companies have spent millions to create scale and acquire advantages of other brands, such as prototype designs, digital infrastructure, and growth in markets previously thought of as saturated.

The following is a recap of the 22 most important purchases that took place in the restaurant industry this year. 

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Purchasing Company: Restaurant Brands International

Sold Company: Firehouse Subs

Price Tag: $1 billion

RBI CEO Jose Cil said he sees “tremendous potential to accelerate U.S. and international growth at Firehouse Subs with RBI’s development expertise, global franchisee network and digital capabilities.” The Burger King, Popeyes, and Tim Hortons parent will soon operate a brand that’s tripled in size to roughly 1,200 stores since 2010 and quadrupled systemwide sales to a projected $1.1 billion this year. Year-to-date through October, U.S. same-store sales were growing 20 percent versus 2019, and the brand projects $50 million in adjusted EBITDA for the full year.

The chain’s loyalty program, which represents more than 10 percent of transactions, includes nearly 3.5 million subscribers and enrolls roughly 50,000 additional customers per month. Firehouse’s headquarters will remain in Jacksonville, Florida, and CEO Don Fox and CFO Vincent Burchianti will continue to manage the brand. 

Purchasing Company: Jack in the Box

Sold Company: Del Taco

Price Tag: $575 million

This is first time Jack in the Box will operate another brand since 2017, when it sold 700-unit QDOBA to Apollo Global Management for $305 million. Jack acquired the Mexican fast casual in 2003, when it had 85 locations in 16 states with $65 million in systemwide sales. The burger chain will look to do the same for Del Taco, which operates roughly 600 restaurants across 16 states—297 corporate units and 306 franchises—99 percent of which are drive-thru.

The brand’s company-run same-store sales increased low-single digits in Q3 compared to 2019, while franchise restaurants lifted in the high-single digits. Earlier this year Del Taco launched its Fresh Flex prototype, which includes contactless third-party delivery pickup stations, double drive-thru lanes for mobile orders or delivery driver pickups, and dedicated parking lot areas for curbside customers.

Purchasing Company: FAT Brands

Sold Company: Global Franchising Group 

Price Tag: $442.5 million

Included in the purchase were five quick-service concepts, Hot Dog on a Stick, Round Table Pizza, Great American Cookies, Marble Slab Creamery, and Pretzelmaker. All are 100 percent franchised in the U.S. except for Round Table and Hot Dog on a Stick. Round Table is the largest, with more than 400 locations. The chain closed 13 stores domestically in 2020 and finished with 414 locations—376 franchised and 38 company-owned. Great American Cookies has more than 100 co-branded stores with Marble Slab Creamery. Last year, both companies underwent a rebranding process, including “new brand visions, logos, packaging and store designs filled with modern imagination and energy.” 

Hot Dog on a Stick has “a lot of legs” to co-brand with Fatburger and Johnny Rockets, CEO Andy Wiederhorn said. The chain dropped from 61 domestic outlets to 50 by the end of 2020. Meanwhile Pretzelmaker completed 2020 with 161 U.S. outlets, a net decrease of 19.

Purchasing Company: FAT Brands

Sold Company: Twin Peaks

Price Tag: $300 million

FAT Brands CEO Andy Wiederhorn said the purchase is part of the company’s plan to “expand our market segments into sports and polished casual dining.” 

Hummel told FSR in late July that Twin Peaks should top the 100-unit mark sometime in late summer 2022. And by the beginning of 2027, he expects the brand to reach more than 275 stores. To fuel growth, Twin Peaks hired industry veterans Glenn Moon and John Brisco to oversee domestic and international franchise development, respectively. Moon has more than 15 years of experience in hospitality investment, real estate development, and franchise sales experience, while Brisco was responsible for major growth at Ruby Tuesday and Sbarro.

The brand recently inked agreements to open 10 stores in Philadelphia and three units in Las Vegas. 

Purchasing Company: FAT Brands

Sold Company: Fazoli’s

Price Tag: $130 million

FAT Brands will acquire Fazoli’s from Sentinel Capital Partners, which bought the chain in 2015 from Sun Capital Partners. With nearly 220 units in 28 states and a development pipeline of 100 stores, the fast casual is the largest premium quick-service Italian chain in the U.S.

In Q3, Fazoli’s continued its historic double-digit month-over-month sales streak, with systemwide sales growing 27.4 percent against 2019. The chain saw 8 percent growth in unique loyalty guests in Q3 compared to the second quarter, and experienced total loyalty sales of $5.8 million, good for a nearly 12 percent boost quarter-over-quarter. Also, franchise leads are up more than 45 percent year-over-year, and up more than 75 percent year-to-date. In Q3, the brand signed four area development agreements to add 10 new locations throughout Florida, Georgia, North Carolina, and South Dakota.

Purchasing Company: FAT Brands

Sold Company: Native Grill & Wings

Price Tag: $20 million

The 41-year-old Native, with 23 stores in Arizona, Texas, and Illinois, claims to be the first brand to bring wings to the Southwest. CEO Dan Chaon told FSR in November 2020 that off-premises represented 30 percent of sales and that loyalty signups had soared 135 percent amid the pandemic. 

The addition of Native, including stores scheduled to open and under development, is projected to raise FAT Brands’ post-COVID normalized EBITDA by roughly $3 million next year. 

Purchasing Company: BurgerFi

Sold Company: Anthony’s Coal Fired Pizza & Wings

Price Tag: $161.3 million 

As part of the agreement, the burger brand will acquire Anthony’s 61 company-run restaurants spread across Florida (28), Pennsylvania (12), and New Jersey. The chain is headquartered in Fort Lauderdale, Florida, which is a little more than an hour away from BurgerFi’s home base of Palm Beach.

Anthony’s is centered around a 900-degree coal fired oven, and offers “well done” pizza, coal fired chicken wings, meatballs, handcrafted sandwiches, and salads. Pre-COVID, the chain earned an average unit volume of $2.3 million and a restaurant-level operating margin of 19 percent, and from 2011 to 2019, it grew revenue at a compound annual growth rate of 12 percent. 

This year, the pizza and wings concept launched a new fast-casual format built with a smaller footprint and streamlined operating model. The prototype is expected to bring growth opportunities for both corporate and franchised expansion. 

Purchasing Company: SPB Hospitality

Sold Company: J. Alexander’s

Price Tag: $220 million 

SPB Hospitality, parent of Logan’s Roadhouse and Old Chicago, bought the fine-dining brand at $14 per share, which is was a 14 percent premium over its closing price on July 1. At the time, J. Alexander’s Holdings operated 47 upscale restaurants across five concepts, including J. Alexander’s, Stoney River Steakhouse and Grill, Redlands Grill, Overland Park Grill, and Merus Grill.

J. Alexander’s will go private after nearly six years on the stock market. The company indicated as early as the summer of 2019 that it was seeking strategic alternatives. A potential buyer offered “a premium to the then-current market price,” but that changed once the COVID pandemic hit. The company reduced the proposed purchase price multiple times and insisted on conditions relating to J. Alexander’s performance. As a result, the chain shelved talks and chose to instead focus on rebuilding sales, which eventually led it to SPB. 

Purchasing Company: BBQ Holdings

Sold Company: Village Inn and Bakers Square 

Price Tag: $13.5 million 

The two brands haven’t been without their struggles. The companies’ parent American Blue Ribbon Holdings declared bankruptcy in January. The two brands ended 2019 with 130 company-owned stores, but 33 underperforming units closed as American Blue Ribbon entered bankruptcy, leaving them with 97. Amid the Chapter 11 process, the company-run footprint decreased even further. Twenty-eight more locations permanently shut down and 34 stores were refranchised, putting the final corporate tally at 35. The brands emerged from bankruptcy in September 2020. 

BBQ Holdings, parent of Famous Dave’s, has bigger plans for the concepts, particularly Village Inn. The company plans to open a dual-concept Granite City Food and Brewery and Village Inn store in January. Village Inn will open from 7 a.m. to 3 p.m. while Granite City will open from 3 p.m. to 11 p.m. The company estimated that this type of dual-concept format could generate $1 million in additional revenue and $250,000 in additional EBITDA per location.

Purchasing Company: BBQ Holdings 

Sold Company: Tahoe Joe’s 

Price Tag: $5.2 million 

BBQ Holdings was designated the winner of a bankruptcy auction for Fresh Acquisitions, owner of six-unit steakhouse company, Tahoe Joe’s. The company paid $5.2 million, including $4.2 million in cash plus the assumption of up to $1 million in liabilities. Fresh declared bankruptcy in April after severe disruptions from the COVID pandemic, with most of its stores closing in 2020 and never reopening. Within weeks of the bankruptcy filing, the company rejected all store leases except for the six Tahoe Joe’s restaurants. 

BBQ Holdings believes a co-branded Famous Dave’s restaurant with a concept like Tahoe Joe’s could add $800,000 in revenue and $200,000 in EBITDA per store. The chain has already done so with other steakhouses, including with Texas T-Bone Steakhouse in Colorado Springs and with Cowboy Jack’s steakhouse in Woodbury, Minnesota.

Purchasing Company: Ampex Brands

Sold Company: Au Bon Pain

Price Tag: undisclosed

Richardson Texas-based Ampex Brands, which operates more than 400 locations, took over Au Bon Pain’s 171 locations and acquired franchising rights to an additional 131 stores. The move will boost Ampex’s annual revenue by roughly 10 percent. As a franchisee, it oversees Pizza Hut, KFC, Taco Bell, Long John Silver’s, and 7-Eleven and earns nearly $500 million in yearly revenue. With the purchase of Au Bon Pain, it will serve as a franchisor for the first time in its 16-year history.

The near-term plan is to ramp up Au Bon Pain’s existing stores in the Northeast and Mid-Atlantic. Once those units reopen and show positive results, Ampex will start expanding the company-run footprint.

Purchasing Company: Capriotti’s

Sold Company: Wing Zone

Price Tag: undisclosed

Since Capriotti’s announced its acquisition of Wing Zone in January, both brands have accelerated development. The restaurants signed 12 area development agreements for 53 new stores in Q4, and 16 area development agreements for 39 new stores in Q3. This followed the signing of 89 units in the first two quarters of the year.

“The challenge with sandwiches is, while Capriotti’s is growing at these record numbers, any time we go into a new market, there’s already five or six major competitors there ahead of us,” David Bloom, Capriotti’s and Wing Zone’s chief development and operating officer, told QSR in January. “Lots of people in the sandwich space, while the wing category is just the opposite. There’s one national brand, and a bunch of regionals—that’s it. So it kind of fit the bill for us. You have lots of white space. We’re very, very big on technology investments and owning and operating our own restaurants to be really good at it. Wing Zone really provided all those opportunities.”

Purchasing Company: Peak Rock Capital

Sold Company: Shipley Do-Nuts

Price Tag: undisclosed

Shipley Do-Nuts was formed 85 years ago and now operates more than 300 locations in nine states. President Lawrence Shipley III, a third-generation leader, retired to focus on other family investments, but the Shipley family remain as investors in the company. This was Peak Rock’s 12th investment in the food, beverage, and consumer industry in recent years. Its portfolio includes food manufacturers such as Halo Foods, Turkey Hill, and Pretzels Inc.

Shipley Do-Nuts, based in Texas, was founded in 1936 by Lawrence Shipley Sr. amid the Great Depression. At the time, doughnuts were 5 cents per dozen and only sold wholesale. The menu features a variety of doughnuts, kolaches, and rolls.

Purchasing Company: Flynn Restaurant Group 

Sold Company: Wendy’s and Pizza Hut franchise stores

Price Tag: $552.6 million

The franchisee acquired 937 Pizza Hut and 194 Wendy’s units for $552.6 million from NPC International, boosting its total footprint to 2,355 restaurants and 73,000 employees in 44 states. Flynn Restaurant Group is the largest operator for Applebee’s, Arby’s, and Pizza Hut, the second-largest for Panera, the third-largest for Taco Bell, and the fifth-largest for Wendy’s.

NPC filed bankruptcy on July 1, citing a drop in profitability from its Pizza Hut business because of labor pressures, a lack of sales growth, volatility in the commodities market, loss of market share, pricing pressures, reduced traffic, and more. In the court filing, NPC said many of the pressures were exacerbated by the COVID pandemic. In August 2020, the company reached an agreement with Pizza Hut to close up to 300 stores, most of which were dine-in units.

Purchasing Company: Amici Partners Group

Sold Company: Friendly’s

Price Tag: $2 million

Friendly’s, a fine-dining landmark founded in 1935, filed for bankruptcy in early November 2020—the second time it’s done so in nine years. The chain said at the time Chapter 11 would facilitate a roughly $2 million sale to Amici, whose restaurant portfolio includes Red Mango Yogurt Café Smoothie & Juice Bar, Smoothie Factory Juice Bar, RedBrick Pizza Kitchen Café, Orange Leaf, Humble Donut Co., and Souper Salad. The transaction was officially announced in January. 

Since the leadership change, Friendly’s has initiated a turnaround based on multiple avenues of innovation, including classic LTOs, a new Sweet Rewards Club loyalty program, a revamped off-premises strategy with curbside delivery,  and a new fast-casual model that will debut in Westfield, Massachusetts. In addition to brick-and-mortar, Friendly’s is looking to open a handful of ghost kitchens throughout the Northeast to “plug any holes” where it doesn’t make sense to build a traditional restaurant. The first one is in Philadelphia, and a second location is in Boston. 

Purchasing Company: Thompson Street Capital Partners

Sold Company: Freddy’s Frozen Custard & Steakburgers

Price Tag: undisclosed 

After the transaction was announced in March, Freddy’s has continued to boost development. In November, the burger chain revealed that it signed four multi-unit agreements with new and existing operators to bring more than a dozen new restaurants to New Jersey, Texas, Indiana, Kentucky, Tennessee, and South Dakota. Year-to-date, the chain has executed 13 multi-unit agreements, adding nearly 70 new restaurants to its development pipeline. Also, in July, the company showcased a new prototype that boasts a double drive-thru, walk-up ordering station, and no seating inside. 

Thompson Street Capital, based in St. Louis, focuses on middle-market business in the healthcare and life science services, software and technology services, and business services and engineered products sectors. Since it was founded in 2000, it has acquired more than 100 companies and managed more than $2.6 billion in equity.

Purchasing Company: Artemis Lane Partners

Sold Company: Lee’s Famous Recipe Chicken

Price Tag: undisclosed 

Former CEO Chuck Cooper referred to Lee’s as the “belle of the ball” during 2020. Customers flocked to the 130-unit chain’s drive-thru as dine-in options became unavailable. Sales skyrocketed 20 to 40 percent some months. AUVs in 2020 reached a record $1.46 million, and same-store sales increased 12.7 percent compared to 2019.

Trends remained strong through the first part of 2021. sales grew 5 percent in May, or 23 percent on a two-year stack. Year-to-date through June, the chicken chain was up 16.3 percent year-over-year. At that point, Lee’s experienced comps growth in 40 of the past 44 quarters, and 68 stores reported monthly sales records in 2021. The chain projected that it would post AUVs of more than $1.55 million this year, resetting the record it recently broke. 

Artemis Lane is led by Ryan Weaver, Sam Kaplan, and Kyle Tucker. The equity firm seeks to produce “flexible and patient capital to great businesses with substantial reinvestment opportunities.”

Purchasing Company: Yadav Enterprises 

Sold Company: Taco Cabana

Price Tag: $85 million

Yadav Enterprises operates nearly 400 locations across Northern California, Texas, and 16 other states. The company is the largest Jack in the Box franchisee and one of the largest Denny’s and TGI Friday’s operators. Yadav is also a significant investor in the ownership group of TGI Friday’s, and serves as a franchisee for El Pollo Loco and Corner Bakery Cafe.

Fiesta Restaurant Group CEO Stockinger said the company made the strategic decision to sell Taco Cabana to allow its leadership team to focus on accelerating the growth of its other brand, Pollo Tropical. Proceeds from the sale are being used to fully repay Fiesta’s roughly $74.6 million in outstanding term loan borrowings and to pay $4.6 million for transaction fees and a loan prepayment premium.

Purchasing Company: Pie Guy Restaurants

Sold Company: Rapid Fired Pizza

Price Tag: undisclosed

Pie Guys Restaurants, co-owned by franchisees Mike Kern and Chip Hurst, operates Rapid Fired Pizza locations in Spartanburg, Greenville, and Easly, South Carolina. It’s also an area developer for the concept in South Carolina and North Carolina. Kern is the new CEO and president of the fast casual, while Hurst is chief development officer. 

The company said Kern and Hurst are positioned to “enhance and optimize the brand proposition” by growing relevancy and market share. To this end, the company plans to focus on franchise development throughout existing markets in the Midwest, Southeast, and Texas. Five stores are scheduled to open in the next year, including Anderson and Greenwood, South Carolina; Parkersburg, West Virginia; Indiana; and Texas.

Purchasing Company: Roark Capital

Sold Company: Nothing Bundt Cake 

Price Tag: undisclosed

Levine Leichtman Capital Partners, a Los Angeles-based private equity firm, announced in May that it sold Nothing Bundt Cakes to Roark Capital, which also has investments in Buffalo Wild Wings and Arby’s parent Inspire Brands, Moe’s Southwest Grill and Jamba parent Focus Brands, Carl’s Jr. and Hardee’s, and The Cheesecake Factory. 

Nothing Bundt Cakes has nearly 400 locations in the U.S. and Canada. The Company was founded in 1997 and is headquartered in Addison, Texas.

Purchasing Company: Leonard Green & Partners

Sold Company: Velvet Taco 

Price Tag: undisclosed

Leonard Green & Partners became Velvet Taco’s new majority owner. The stake was acquired from L Catterton, which served as majority owner for five years, and FB Society (formerly Front Burner Restaurants), the innovation lab that founded the taco chain 10 years ago. Both companies will remain invested in Velvet Taco via significant minority ownership. 

Since 2017, the Dallas-based fast casual has expanded from four stores to more than 30 open or in development across six states, and expects to reach 40 locations nationwide by the end of next year. The chain boasts an AUV of $4.3 million, and the most recent stores have earned more than $100,000 in sales during their opening week.

Purchasing Company: Sweetgreen

Sold Company: Spyce 

Price Tag: undisclosed

Founded by MIT graduates Michael Farid, Brady Knight, Luke Schlueter, and Kale Rogers, Spyce utilizes what’s called an “Infinite Kitchen,” a conveyor belt lined with dispensers that automatically release precise portions of ingredients. The robotic system allows Spyce to cook up to 350 personalized salads and grain bowls per hour and fulfill orders in three minutes or less. Since its founding, Spyce has raised nearly $25 million, including an investment from James Beard Award winner Daniel Boulud.

Sweetgreen, which now has more than 140 restaurants, is in the process of determining when and where it will introduce Spyce’s technology. The company said the purchase will allow restaurants to generate faster and more consistent orders and enhance the menu beyond warm bowls, salad, and sides.