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| Good Morning Wolf Pack, Today's newsletter covers Foodtastic's $702M bid for MTY Group, AES Restaurant Group becoming Arby's largest franchisee, and Wendy's rejection of a $1.4B buyout offer. Enjoy! Was this email forwarded to you? FROM THE WOLF DEN 1) Foodtastic Makes $702M Bid to Acquire MTY Group as CEO Exits Foodtastic is taking its roughly $702M US offer for MTY Group straight to shareholders after two rejected approaches. The bid values MTY at $43 CAD per share, a 32% premium to its Oct. 30 close. MTY runs more than 80 brands across 40 countries and about 7,000 units, including Wetzel's, Papa Murphy's, Pinkberry and Cold Stone. It is in the middle of a strategic review, and CEO Eric Lefebvre has been ousted and replaced by Victor Mandel. Foodtastic is smaller, with about 30 brands and 1,200 units that include Freshii, Pita Pit and Dunkin'. Foodtastic's Mammas argues MTY "became undisciplined in its operations and acquisitions." 2) AES Passes Flynn to Become Largest Arby's Franchisee AES Restaurant Group has become the largest Arby's franchisee after buying 23 Knoxville restaurants from Inspire Brands. That brings AES to 362 units in 20 states, edging past Flynn Restaurant Group at 358. The deal comes as Arby's sales slipped 2.8% last year, ending a run of 13 years of comp gains. AES leadership says the dip is a reason to buy rather than back off. Wade put it this way: "when there's one of those speed bumps, I lean in." Per the FDD, an Arby's costs $651,550 to $2.46M to open and averages $1.27M in sales. Inspire, Arby's parent, filed confidentially for an IPO in May. 3) Wendy's Rejects $1.4B Trian Buyout Offer as Q3 Sales Fall Wendy's has turned down a $1.4B buyout offer from a group led by Trian, which together with Blue Fifth, Sixth Street and Flynn owns about 16% of the company. The rejection came alongside a rough third quarter: U.S. same-store sales fell 5.7% and net income dropped to $15.1M from $44.3M a year ago. Burger King has now overtaken Wendy's as the No. 2 burger chain. Management is pointing to its "Dave's Way" turnaround, which includes a voluntary breakfast push, a $200M EBITDA target, a new Strategic Activation Office and the leadership of Tariq Hassan. The company also plans to acquire up to 163 Meritage restaurants. CEO Wright said, "We are clearly not satisfied with that performance." EXTRA SAUCE 💥 Dog Haus Names First Four of 15 Area Directors Dog Haus has announced the first four of 15 area directors it plans to bring on as the brand pushes toward a much larger footprint. The area director model puts experienced local operators in charge of growing and supporting franchisees in their territories. The brand says the structure is built to scale development across the country. Papa Johns Unveils "Unbox Better" Plan Amid Continued Sales Slump Papa Johns has rolled out its "Unbox Better" plan as same-store sales fell 8.3 percent. The plan adjusts advertising fund contributions and adds about 100 basis points on commissary pricing, changes aimed at giving franchisees more room to operate. The chain is leaning on the reset to turn around a stretch of weak sales. Krispy Kreme Raises Guidance as Turnaround Plan Gains Steam Krispy Kreme raised its guidance after systemwide sales grew 1 percent and adjusted EBITDA climbed 12.7 percent to $35.3M. Capital spending fell 65 percent, and free cash flow topped $15M. Franchisees now make up 42 percent of the system as the company leans on its turnaround plan. Canadian PE Firm Adds Two Toronto Brands With Plans for U.S. Expansion Serruya Private Equity has added two Toronto-based brands to its portfolio and plans to take them south of the border. The firm is betting that concepts proven in Canada can find new life with U.S. franchise growth. Franchise Times reports the acquisitions as part of a broader push into franchising. Hello Sugar CEO Shares Success Behind Suite-to-Storefront Growth Approach Hello Sugar has grown to 305 units by starting franchisees in small suites before moving them into storefronts. A suite build runs $92,210 to $130,654, while a flagship storefront costs $265,374 to $734,705. The CEO says the lower-cost entry point is a big reason owners have been able to scale. 61-Unit Outback Steakhouse Franchisee Files for Bankruptcy Out West Restaurant Group, a 61-unit Outback Steakhouse franchisee, has filed for bankruptcy with about $320M in secured debt. Bloomin' Brands has lined up a $26.3M stalking-horse bid for the restaurants and is providing $5.5M in debtor-in-possession financing. The filing puts one of the system's largest operators into a court-supervised sale. TGI Fridays Seeks Revival as Chain Signs First U.S. Franchisee in a Decade TGI Fridays has signed its first U.S. franchisee in a decade as it works to rebuild the brand. The chain has 68 U.S. units and is targeting 50 to 75 openings, including Bliss Bites, a small format that has put five units in New York over three years. The signing is an early test of whether franchising can power the comeback. Decline Continues for Club Pilates Parent Xponential as Shareholder Floats Take-Private Offer Xponential Fitness revenue fell 21 percent to $62.3M, and same-store sales dropped 7.5 percent. A shareholder is now floating a take-private offer at $5.61 to $7 per share. The Club Pilates parent continues to shrink as it works through its restructuring. Starbird Appoints Restaurant Industry Veteran John Phillips as Chief Development Officer Starbird has named restaurant industry veteran John Phillips its chief development officer. He will lead the chicken brand's franchise growth and real estate strategy. The hire comes as Starbird builds out its leadership team for expansion. Bubbakoo's Burritos Signs Two-Unit Deal in North Carolina Bubbakoo's Burritos has signed a two-unit franchise deal in North Carolina. The agreement continues the brand's push into new Southeastern markets. The company says it is looking for more multi-unit operators to join the system. FIT House of Brands Launches Limited-Time Incentive for U.S. Multi-Unit Franchise Partners FIT House of Brands has launched a limited-time incentive aimed at U.S. multi-unit franchise partners. The offer comes as the company says its global growth is accelerating. It is designed to pull experienced operators into the system. Always Best Care Strengthens Franchise Support With Two Leadership Appointments Always Best Care has made two leadership appointments to strengthen support for its franchisees. The senior care brand says the hires will help owners with training and growth. The move reflects its focus on franchise operations as the system expands. WOLF BITES
That’s it for this edition of The Wolf Report. Feel free to reply with any questions or feedback. Thanks and see you Thursday! — The Wolf | ||||
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