The parent of the Good Times quick-service burger chain said it has agreed to acquire the Bad Daddy’s casual chain for $21 million.
Good Times Restaurants has served as a licensee of Bad Daddy's and an investor in the casual operation’s franchising arm for roughly two years.
Good Times is funding the deal through the simultaneous secondary offering of 2.4 million common shares. It estimates that the issue will generate $17.4 million for the company after fees and commissions are paid.
Good Times already owned a stake in Bad Daddy’s franchising arm. The deal essentially makes Good Times the franchisor of the concept as well as the operator of the 13 Bad Daddy’s restaurants that are open.
Bad Daddy’s specializes in burgers and beer. In addition to traditional burgers, the menu sports versions made with tuna, turkey, buffalo and chicken. Its signature is an oversized beef burger, the Bad Ass.
In an interview conducted with Restaurant Business about two weeks ago, Good Times CEO Boyd Hoback explained why his company was interested in the Bad Daddy’s concept. “The Bad Daddy’s concept has a very high volume to begin with out of a fairly small facility, averaging over $700 a square foot in sales,” said Hoback. “The two most recent stores—located in Southlands and Northglenn, Colorado—are above the system average of around $2.5 million per store.”
He sees the concept as a strong one for suburban locations in particular.
Hoback also noted that the chain continues to draw interest from prospective franchisees, adding that Bad Daddy’s had turned down some franchisees, while others said they want to see how the concept performs in a multitude of markets. Currently, its stores are located in Colorado, the Carolinas and Tennessee.
The concept was started by Frank Scibelli, who teamed up for the second unit with Dennis Thompson, a veteran of Lone Star Steakhouse and Fox & Hounds.
Good Times, whose namesake restaurants are clustered in Colorado, has said that it views Bad Daddy’s as its future growth vehicle. However, it has maintained that it will continue to expand its namesake operation as well.
Good Times had revealed plans to open seven Bad Daddy’s units this year before the deal was announced.