What prompted BurgerFi to pay more than $161 million to buy 61-unit Anthony’s Coal Fired Pizza & Wings?
It wasn’t necessarily the L Catterton-owned casual-dining concept itself, executives disclosed Tuesday, a day after announcing the deal. Rather, BurgerFi intends to focus on growing a half-sized, fast-casual version of Anthony’s, executives explained during a call with analysts.
Currently, there is just one 1,700-square-foot unit, in Springfield, Pa. Two to three new fast-casual Anthony’s restaurants are slated to open in Florida next year, CFO Michael Rabinovitch said. The prototypes serve the full Anthony’s menu, with a slightly smaller kitchen, fewer seats, no full bar and a larger focus on off-premise business.
A small-footprint Anthony’s location costs about $600,000 to build—half that of the chain’s traditional restaurants, executives said.
Anthony’s also has an “exciting new virtual concept” called The Roasted Wing that launched last November, Rabinovitch noted. The concept sells roasted chicken wings and garlic knots and is available at all Anthony's locations.
“We are very excited about this transaction,” Ian Baines, who will become group CEO of both brands when the deal closes, told analysts. “As a combined company, we expect to realize a unique opportunity to enhance scale, increase diversification, grow combined EBITDA and use a significant amount of cash flow to fund future growth and development.”
Fast-casual BurgerFi, based in Palm Beach, Fla., also said it expects to benefit from a large number of synergies as a result of the Anthony’s deal.
Anthony’s fits well with BurgerFi because it has a streamlined menu of 25 items, four-minute cook times, organizational capabilities that can be shared between brands and high-level execution at the restaurant level, executives noted.
The company intends to monitor the performance of the fast-casual Anthony’s concept to see whether to grow it internally or via franchising.
Shareholder approval is not required for the transaction because the number of common shares in all cases will be below 20%, BurgerFi executives noted.
The deal also helps BurgerFi align with L Catterton, a potential boon as it seeks to add more brands to its fold. When the transaction closes, L Catterton will become one of BurgerFi’s largest shareholders.
The Anthony’s acquisition comes less than a year after the better burger brand went public after being purchased by Opes Acquisition Corp, a special purposes acquisition company, or SPAC.
Anthony’s was founded in 2002 and specializes in quick-cooked pizzas baked in a 900-degree, coal-fired oven.
Ophir Sternberg, BurgerFi’s executive chairman, on Tuesday referred to the deal as BurgerFi’s “first M&A transaction,” hinting at plans to acquire more chains in the future.
This story has been updated to clarify Ian Baines' title as well as the number of locations for The Roasted Wing.