Financing

The owner of Quiznos and Church's is buying some Hardee's restaurants out of bankruptcy

High Bluff Capital Partners won bidding for 81 of the 108 locations for $16 million. Hardee’s parent CKE Restaurants is buying another nine locations.
Hardee's acquisition
High Bluff Capital Partners is acquiring 81 Hardee's locations out of bankruptcy. | Photo: Shutterstock.

High Bluff Capital Partners, the private equity firm that owns Church’s Texas Chicken and Quiznos, is acquiring 81 Hardee’s locations out of bankruptcy, the company said on Monday.

High Bluff is paying $16.23 million for the locations, which are in Alabama, Florida, Georgia, Kansas, Missouri, Montana, South Carolina and Wyoming and had been owned by Bighorn Restaurants, which declared Chapter 11 bankruptcy in May.

The San Diego-based High Bluff had previously been chosen as the “stalking horse bidder,” or an initial bidder in the bankruptcy auction for the Bighorn Restaurants. The franchisee, also known as Summit Restaurant Holdings, operated 108 locations when it filed for bankruptcy after closing 39 restaurants.

CKE Restaurants, which owns Hardee’s and sister company Carl’s Jr., acquired nine other Bighorn-owned restaurants for $672,000, including $375,000 in cash and $357,000 in assumed liabilities. Another operator, known as Ozark Stars, acquired one other restaurant for $35,000 in cash and $33,000 in assumed liabilities.

That leaves 17 restaurants that were not sold out of the bankruptcy auction.

Max Wetzel, CEO of CKE Restaurants, said High Bluff has “an impressive track record of growing numerous consumer brands” and called the private-equity firm “the ideal partner to support our efforts to deliver outstanding service and the foods our core customers crave, while making critical investments in restaurant remodels and other initiatives designed to boost traffic and sales.”

The combined sale price of the Bighorn/Summit restaurants does not match the $22 million in secured debt that the franchisee had when it declared bankruptcy.

The operator struggled with declining traffic during the pandemic and then with high food and labor costs coming out of that period. The brand itself has struggled. U.S. system sales at Hardee’s declined 4.2% in 2022, according to Restaurant Business sister company Technomic.

Average unit volumes are up 6.5% over the past decade. Adjusted for inflation, however, they are 19% below where volumes would be if the company has simply kept pace with the consumer price index.

Coady Smith, a principal with High Bluff said the acquisition will bring “additional scale and diversity” to the company’s platform. The firm expects to make additional acquisitions, “with the goal of growing our platform to six to 10 restaurant concepts” with $75 million to $100 million in earnings.

Dave Dixon, who has worked with several brands over the years and spent three years operating 116 Hardee’s locations two decades ago, will lead operations at the newly acquired restaurants.

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