The latest discount at Burger King is a big one: Five Iowa restaurants.
Tasty Restaurant Group, a private equity-owned franchisee out of Los Angeles, on Wednesday announced it had agreed to buy five Burger King locations in Iowa, three of which include the underlying real estate, for about the price of a large French fries order: $1. At least that’s according to the company’s announcement of the sale.
It’s uncertain exactly why the five restaurants were sold for such a low price. A representative of Tasty Restaurant Group would not go into details but called it a “straightforward transaction” in which the operator is assuming the assets and liabilities held by each location it is acquiring.
They also noted that “it’s fair to say that the COVID pandemic is presenting strong opportunities for investors like Tasty,” which will operate 72 Burger King units once the deal is completed to go along with 116 Pizza Hut restaurants.
Tasty Restaurant Group is owned by the private equity group Triton Pacific.
“Quick-service restaurants have performed well over the past few months, most notably due to the sector’s ability to quickly adapt to social-distancing requirements with minimal interruption,” Craig Faggen, Triton Pacific CEO, said in a statement.
The five locations are in Western Iowa, he said, and he expects the restaurants “will provide strong cash flow due to improved economies of scale and increased market share.”
The sale might be a small one, but it’s also a sign of the challenges in the franchise space, where small franchisees struggle to get financing for remodels or expansion and end up selling to much larger companies, which amass greater and greater holdings.
Still, the dollar sale price is eye-popping, potentially indicative of the willingness of some operators facing challenges in the current environment to simply walk away—even as sales in the fast-food space have apparently recovered.
Nevertheless, such sale prices aren’t entirely unheard of in the restaurant space. Even before the pandemic, restaurant chains or franchisees struggling with finances or with major costs coming up sometimes unloaded at figurative or literal giveaway prices.