To say that 2017 has been a big year for restaurant acquisitions is a giant understatement.
In the time it’s taken us to compile this list and write this story, two brands have changed hands, meaning that 36 restaurant brands with 10 or more units have done so in the last 12 months. That includes the sales in recent weeks of Captain D’s to Sentinel Capital and Qdoba to Apollo Global Management.
Buyers are plentiful, and they have access to capital and demand for growth to push them to pay higher prices for the right targets. The result has been the busiest year for restaurant mergers and acquisitions since before the recession.
Chains like Popeyes were sold for record multiples. Others had to be sold out of bankruptcy court. Several chains are being taken private, while some smaller chains are going public.
How long the flourishing deal environment remains is left to be seen. But here’s a look at the 10 biggest restaurant deals of 2017.
JAB Holding buys Panera Bread
In terms of sheer deal size, this was the biggest, at $7.5 billion. JAB’s acquisition of the St. Louis-based bakery-cafe chain, in fact, was the biggest since the $11 billion merger between Burger King and Tim Hortons in 2014. The deal revealed the lengths to which JAB, which has been buying up chains at a breakneck pace in the past couple of years, would go to add to its massive holdings of coffee and breakfast concepts.
Amazon buys Whole Foods
Sure, Whole Foods is technically not a restaurant chain. But large portions of its supermarkets sure look like modern-day buffet concepts. Maybe no supermarket has done as much as Whole Foods to muscle its way into restaurants’ turf, which makes its $13.4 billion sale to an even bigger disruptor in Amazon all the more incredible. An Amazon-owned Whole Foods promises to be an even bigger competitor to the restaurant business.
Roark buys Buffalo Wild Wings
The Atlanta-based private-equity firm is paying $2.4 billion for the Minneapolis-based chicken wing chain. Like the Panera deal, this one was a surprise, taking private a chain that not long ago had been one of the top-performing restaurant companies on Wall Street. But the chain’s stock price had fallen 40% from its highs, giving serial restaurant-acquirer Roark an opening.
Restaurant Brands International buys Popeyes
In terms of deal valuation, as measured as a multiple of earnings before interest, taxes, depreciation and amortization, RBI's $1.8 billion acquisition of Popeyes was nearly a record—almost 20 times EBITDA. By contrast, the average deal multiple this year was 12, according to Bernstein Research. That proves just how much Burger King owner RBI wanted the chicken chain, which it could use to grow internationally and in the U.S.
Darden buys Cheddar’s
Not long ago, investors were pressuring Olive Garden owner Darden to unload concepts, and it did, selling off Red Lobster. Now that the multibrand casual-dining operator has performed better than most of its competitors in recent quarters, the company is back on the buying spree, paying $780 million for casual-dining concept Cheddar’s Scratch Kitchen.
NRD buys Ruby Tuesday
In terms of dollars, this deal was considerably smaller than many of the others on this list, with the private-equity firm NRD Capital paying $146 million for the struggling casual-dining chain. But Ruby Tuesday has long been one of the most closely watched chains in the industry, largely because it has struggled for so long and is viewed as a leading indicator for the challenges full-service chains are facing. The acquisition finally takes Ruby Tuesday away from the public limelight.
Fat Brands goes public
This is the smallest deal on this list. But that doesn’t make it any less consequential. When Fatburger owner Fat Brands raised $24 million in a Regulation A+ initial public offering in October, the company ushered in an era in which small companies could raise funds from customers. Restaurant chains are expected to be big users of this new style of raising capital from investors, which could enable many smaller chains to go public and get capital to grow.
Tilman Fertitta gets his chain back
Joe’s Crab Shack owner Ignite Restaurant Group filed for bankruptcy protection in June in part because no buyer would touch the company unless it could reduce debt or get out of costly leases. But that gave Joe’s former owner, Landry’s, and its owner, Tilman Fertitta, an opening to get the chain back. After some at-times difficult negotiations, Landry’s agreed to pay $57 million for Joe’s and Brick House Tavern.
Freeman Spogli buys Cafe Rio
For years, it seemed, the Salt Lake City-based Cafe Rio had been a rumored IPO candidate. But then that market, at least for restaurant chains, collapsed. That might have led to the sale this past September to the private-equity firm Freeman Spogli. The firm bought the chain from another private-equity group, KarpReilly.
Advent International acquires First Watch
While everybody was focused on fast-casual chains, breakfast-focused family-dining concepts quietly took hold around the country. This year they became hot properties, as noted by the July acquisition of the space’s biggest, First Watch, by the private-equity group Advent International.
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