Restaurant customers may be reluctant to spend, but restaurant investors are a different story. The number of chains purchased so far this year is the highest since 2006, according to Bloomberg analysis, and Wall Street speculation holds the industry could see another blockbuster sale before the ball drops on Times Square.
What big operations might change hands before 2018 is rung in? Here are the ones cited in reports from the financial community as the most likely candidates.
An activist investor called Jana Partners revealed in a securities filing that it intends to explore the possibility of a sale or other “strategic alternatives” for Bloomin’ Brands after amassing 8.7% of the casual-dining giant’s stock. Wall Street expects the firm to press for a breakup of the company or the sale of at least one of Outback’s sister brands. In addition to the Australian-themed powerhouse, Bloomin’ operates Carrabba’s Italian Grill, Bonefish Grill and Fleming’s.
Bloomin' has responded, "We are aware of the filing and look forward to meeting with Jana representatives."
Among the members of Jana’s team is at least one restaurant-chain veteran, Neal Yanofsky, a former president of Panera Bread Co. and the chairman of Cheddar’s Scratch Kitchen until its sale to Darden Restaurants earlier this year.
A deal for all of Bloomin’ would not be unprecedented. The company, then known as OSI Restaurant Partners, was sold to Bain Capital and Catterton Partners in 2006 for $3.5 billion. It would fetch far more than that at today’s prevailing multiples.
Jack in the Box’s Qdoba chain
The most likely near-term deal, according to speculation that surged this morning, is the sale of Jack in the Box’s secondary chain, the Qdoba Tex-Mex operation, to the private-equity firm Apollo Global Management. Reuters reported this morning that Apollo is set to write a check for $300 million as early as next week. The anonymous sources were identified as persons close to the negotiations.
Apollo is the current owner of the Chuck E. Cheese's brand. There has been speculation that Qdoba might provide enough mass for the firm to spin off its restaurant holdings into a public company.
The deal would likely be applauded by Jana, which isn’t exactly sitting on the sidelines. Before building its stake in Bloomin’, the firm acquired a 4.5% interest in Jack in the Box. The franchisor has been under pressure from shareholders to spin off Qdoba and focus on its namesake operation.
Buffalo Wild Wings
Almost simultaneously with the news about Qdoba came a report from Bloomberg that Roark Capital was intensifying its efforts to buy Buffalo Wild Wings. The news agency reported that the PE company had sweetened its $150-a-share friendly offer, presented to BWW management in October but not leaked until just before Thanksgiving, to $155.
The deal would be the biggest escalation of a restaurant-brand buying frenzy for Roark that began with the acquisition of Carvel. Now it’s in a different league altogether, with holdings that include Carl’s Jr., Arby’s and Corner Market. In the last 14 months alone, it added stakes in Jimmy John’s and Culver’s.