Brix Holdings CEO Sherif Mityas likes to compare running a restaurant group to skin.
Above the outer layer are the characteristics that make a restaurant unique: menu, food offerings, restaurant design, colors, service model, and taglines. And Brix differentiates by having brand-specific employees responsible for those departments.
Below the skin, the part that guests don’t see, components are a lot more similar across the board. Like a singular technology and finance team that can support all brands in the portfolio. Chains need POS, back-office systems, and loyalty programs, but those can be shared. That’s where the cost savings and synergies come into play.
“That’s the scale benefit we get by being able to supply those things across all the brands with centralized shared services,” Mityas says. “But the things that touch the guests that are visible, you have to make sure that they stay unique, that they’re specific, and differentiated by brand. And we have people that are dedicated to those brands for those types of activities.”
Brix comprises Friendly’s, Orange Leaf, Red Mango, Smoothie Factory + Kitchen, Humble Donut Co., Pizza Jukebox, and Clean Juice. The company is one of many concepts consolidating in the restaurant industry to unlock greater power, scale, and resources compared to one concept going at it alone.
The obstacles faced by restaurant groups aren’t too different from any single chain, says Mityas. It often goes back to, “How do you create unique experiences for your guests?” And in today’s time, when prices are up, it’s tough for guests to go out versus eating at home. Brands need the complete package to earn a customer’s dollar. From a portfolio perspective, Brix has to worry about that seven times over, considering the varying consumers, targets, dayparts, and occasions for each of its restaurants. Mityas says “It becomes a little bit of a Rubik’s Cube because you’re working with different dimensions of guests.”
“While there’s obstacles and challenges, there’s also these opportunities to leverage the strength of the portfolio and increase the opportunity for all the brands to get better, to perform better, and to grow because of the strength of the portfolio,” Mityas says.
FAT Brands chairman Andy Wiederhorn, who oversees nearly 20 chains across 47 states, 40 countries, 2,380-plus locations, and 760-plus franchisees, agrees with Mityas that customer-facing attributes are crucial in operating a restaurant group effectively. To him, each restaurant must understand what it’s known for and lean into it, whether that’s the best wings, burgers, or buffet. For Great American Cookies, it’s the cookie cakes that many order for their graduation, proms, birthdays, and other special occasions. For Twin Peaks, it’s the 29-degree beer.
Behind the scenes, FAT Brands is organized into separate verticals (quick service, fast casual, casual dining, polished dining, and a manufacturing business) to create savings by buying in bulk and leveraging purchasing power.
Wiederhorn adds that best practices, like cleanliness, food safety, and recipes, are universal across multiple concepts. When it comes to the brand level, the company relies on its presidents to work with the marketing team to develop specific initiatives.
“We’re bringing everybody together so they realize that they’re part of a much bigger system and that they can understand the purchasing power and the shared services and things that they can take advantage of,” Wiederhorn says. “So we’ll have supply chain meetings where there’s attendees from all brands and they can all talk about what they need in their brand and what we have going on as initiatives and best practices. But in terms of communicating, it’s usually either the marketing teams or the brand presidents communicating to their brands, whatever messaging is applicable at the brand level.
“We might send out messages about same-store sales or ‘Here’s what we’re seeing in terms of traffic or cost across categories or across the system,’ but not that often,” he adds. “ It’s really more at the brand category level.”
Jay Fiske, president of Powerhouse Dynamics, is familiar with building the behind-the-scenes structure that Wiederhorn and Mityas refer to. He helps run an IoT company that connects devices—oven, shake machines, thermostat, etc.—directly to the internet so that operations managers can easily access the latest information on their equipment.
For more than a decade, Powerhouse Dynamics has worked with Inspire Brands, one of the largest restaurant groups in America. The technology is based in close to 4,000 locations across Arby’s, Buffalo Wild Wings, and Dunkin’. The company started at Arby’s with internet-connected thermostats, which involved installing energy sensors to track HVAC equipment and performance. Powerhouse Dynamics began by rolling out the technology to corporate stores and then expanded it to franchisees. Inspire then approached the company about using the same innovation for its ovens.
Powerhouse Dynamics’ system automatically tracks oven temperatures from the moment food is placed inside until it’s cooked, eliminating the need for manual temperature checks and record-keeping. Previously, kitchen staff would manually monitor and record temperatures, a time-consuming task prone to errors. With Powerhouse Dynamics’ IoT solution, oven data is seamlessly transmitted to the cloud, where it is analyzed and compiled into comprehensive reports. Fiske estimates that his company’s system saves approximately an hour per store per day in administrative work.
Inspire found the technology so useful that it awarded Powerhouse Dynamics with its Maverick Award for Innovation in 2022.
“Margins are thin and there’s a lot of complexity,” Fiske says. “You’ve got high staff turnover. So how can you apply technology to manage this infrastructure in such a way that you let people focus on what people are good at and let technology help take a lot of the burden off of the shoulders of running a restaurant, especially for the multi-site?”
When these types of technologies can be spread throughout multiple concepts at the same time, restaurant groups find it easier to fold acquired chains into the portfolio. The transaction essentially turns into a “plug and play” situation.
Wiederhorn has been involved in several purchases over the years.
FAT Brands began its journey in 2003 with the acquisition of Fatburger. Over the years, the company expanded its portfolio, adding Buffalo’s Café and subsequently launching Buffalo’s Express. In October 2017, Ponderosa Steakhouse and Bonanza Steakhouse were acquired for $10.5 million. This was followed by the acquisition of Hurricane Grill & Wings for $12.5 million in July 2018, and Yalla Mediterranean in August 2018. In June 2019, Elevation Burger was purchased for $10 million.
Amid the challenges of the pandemic, FAT Brands continued its expansion efforts. In September 2020, the company acquired Johnny Rockets for $25 million. The following year saw significant acquisitions, including Global Franchise Group (comprising Round Table Pizza, Great American Cookies, Marble Slab Creamery, Hot Dog on a Stick, and Pretzelmaker) for approximately $445 million, Twin Peaks for $300 million, Fazoli’s for $130 million, and Native Grill & Wings for $20 million. Additionally, Nestlé Toll House Café was acquired in late 2022, followed by Smokey Bones in 2023.
Wiederhorn stresses the importance of selecting proven brands with a track record of success across numerous markets and units. He also notes that FAT Brands typically targets franchise brands for acquisition, citing their scalability and ability to stand independently. However, he mentioned that the acquisition of Smokey Bones was somewhat unique, as the company plans to convert some stores to Twin Peaks and potentially re-franchise others. This decision, he explains, was driven partly by the desire to diversify the company’s portfolio with a barbecue brand.
“I made mistakes before where I bought brands that were too small and it’s one mistake or problem along the way,” Wiederhorn says. “Soaks up all the cash flow from that brand. And it’s a bad lease or something else. So that’s something that we always work for today is, if we’re going to make an acquisition, does it have enough scale to make sense for us? Today we’re fortunate that we have so many stores and then we’re looking for, in our case, has it been proven in a franchise model because we’re really a global franchising company.”
Brix Holdings has shown interest in M&A activity too. In April, the group revealed that it reached a deal to acquire Clean Juice, a better-for-you fast casual with 75-plus units and a dozen more in development. That brought Brix’s portfolio to more than 300 locations. However, the restaurant group will have some work to do as Clean Juice has shuttered a net of roughly 60 stores since the end of 2022.
At the time of the acquisition, Mityas said each of Brix’s brands has a “unique and differentiated position” in their respective sectors, and that Clean Juice is in the same class. The restaurant group plans to support a “renewed period of growth and success” for the fast casual.
Wiederhorn, offering advice to restaurant operators aspiring to manage successful restaurant groups, emphasizes the importance of financial awareness and operational efficiency. He says operators need to have a firm grasp on their financial metrics daily, including revenue, labor costs, and food costs. Waiting until weeks after the end of the month to assess financial performance could result in missed opportunities to address issues promptly.
In addition to financial vigilance, Wiederhorn highlights the significance of analyzing product mix to ensure menu items align with customer preferences and profitability. He also mentions the necessity of investing in personnel, recognizing the critical role employees play in delivering service and maintaining operations.
“You really have to be sensitive to having a relationship and reducing your turnover,” Wiederhorn says. “You need to care about your people. You need to know what’s going on in their lives so that they can feel connected to you and therefore they’re more loyal than just hopping jobs for the next incremental 50 cents or a dollar they get per hour in their wage. So I think knowing your numbers and knowing your people, investing in your people, are your critical steps.”
Mityas knows it’s cliche, but he believes restaurant group leaders must understand the role of assembling a competent and cohesive team capable of navigating the complexities of managing several brands. He notes that companies shouldn’t view acquisitions as mere add-ons, and urges operators to prioritize seamless integration into the existing portfolio.
It helps that Brix plays in both the quick-service and casual-dining spaces.
“Because we play across all the segments, we actually believe we have a better understanding of the total consumer of their different occasions, their different daypart needs,” Mityas says. “Basically the reasons why they go out to a restaurant, when they just need to stop in quickly for something, when they’re ready to spend an hour sitting down and having something. And so that knowledge we believe gives us a more complete view of the guests so that we can better personalize the experience across our brands. We can better create menu innovation because we understand something from one concept is probably applicable to that guest in a different concept. And so by giving us basically just more knowledge of the totality of the guests’ needs and their preferences, we’re in a better position to tailor and create unique and personalized experiences for the total guests, not just when they’re ready for a quick-service experience or not just when they’re ready to come and sit down with their family at our Friendly’s.”
