Buffalo Wild Wings, Arby's look to buy more restaurants

With their $2.9 billion merger closed, the two brands created Inspired Brands as a growth vehicle.

With its $2.9 billion acquisition of Buffalo Wild Wings complete, Arby’s on Monday announced the formation of a new company called Inspire Brands that it plans to be a vehicle to acquire additional restaurant chains.

Inspire Brands promises to be a more unique type of restaurant operator in that it is agnostic about the type of concept—and whether the brand is a franchise or company-owned.

While multibrand concepts are relatively common in the restaurant business, they typically stick to a certain service style—either limited service or full service. Inspire Brands already operates concepts in full service (Buffalo Wild Wings), quick service (Arby’s) and fast casual (R Taco).

“We believe the time is right to create a different kind of restaurant company—one with a broad portfolio of distinct brands across a full spectrum of restaurant occasions,” Paul Brown, CEO of Inspire Brands, said in a statement. “Our goal is to build an organization that leverages the benefits of scale, not only to save cost, but also to enable outsized investments in long-term growth initiatives.”

Inspire Brands will be based in Atlanta, with a support center in Minneapolis. The company’s brands have more than 4,600 total locations, company- and franchise-owned combined, with combined system sales last year of $7.6 billion. The company has 1,700 company-owned restaurants between Arby’s and Buffalo Wild Wings.

Arby’s and its private-equity owner, Roark Capital, emerged as a surprise buyer of Buffalo Wild Wings last year after several months of negotiations. That came after an active year for the chicken wing chain in which activist investors won seats on the company’s board, longtime CEO Sally Smith announced plans to retire, and then it was sold.

The company said on Monday that it plans to “build a family of powerful, distinct restaurant brands that each have high-growth potential, both domestically and internationally.”

The organization is designed to enable each brand to build off the strengths of the others.

“Our family of brands are iconic within their restaurant segments and have succeeded with the help of a strong franchise base, differentiated marketing and, most importantly, delicious food,” Brown said.

This isn’t the first multibrand operator that Roark has helped create. The private-equity firm is also the owner of Focus Brands, the Atlanta-based owner of Moe’s Southwest Grill, McAlister’s Deli, Cinnabon, Carvel, Auntie Anne’s and Schlotzsky’s. Those are primarily franchised brands.

Indeed, most multibrand companies either own franchised brands, such as Burger King, Tim Hortons and Popeyes owner Restaurant Brands International, or company concepts, such as Olive Garden and LongHorn owner Darden Restaurants.

Brown said in an interview with the Wall Street Journal that the company would consider chains with systemwide sales between $1 billion and $4.5 billion. Brown also said that he wants a mix of franchise and company-owned chains.

There were 30 restaurant companies not currently owned by Roark Capital that fit that definition, according to Technomic's Top 500 Chain Restaurant Report.

Buffalo Wild Wings shareholders voted to approve the sale to Arby’s at $157 a share on Friday, paving the way for the creation of Inspire Brands.

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