A sales-leaseback or the formation of a real estate investment trust? Bob Evans Farms said it plans to choose one of the options in the near future to divest the real estate underneath as many as 60 percent of its restaurants.
The company noted in announcing the plan that neither option would prevent the publicly owned concern from splitting apart its two main businesses, restaurants and food manufacturing. It has previously maintained that it would not separate the two divisions.
Bob Evan has been under pressure from shareholders to bolster its value by selling its restaurant plots and spinning off the food division. The dissidents’ cry for change led to the departure of CEO Steve Davis at the end of 2014.
Many operators of chains restaurants sell and lease back the real estate underneath the outlets to generate capital for building more stores. Real estate investment trusts, or REITs, are not as common. A REIT would be owned by shareholders, like a public company. It typically offers investors significant tax advantages.
Bob Evans’ family restaurants have been mired in a sales slowdown. The chain is striving to win more traffic in part with a new broasted chicken line.