Thursday, May 12 2022

2021 has been a big year for mergers and acquisitions in the restaurant industry. Six deals were announced over the nine days between June and July, with many reported in the final months of the year. Companies from all corners of the industry bought and sold, encouraged by low interest rates, resuming sales and renewed interest from investment firms.

Uncertainty over capital gains tax changes also fueled the investment frenzy through the end of 2021, Restaurant diving Remarks. Businesses feared that corporate tax rates would rise in the new year, which would reduce their revenues. Hoping to avoid higher rates and make the most of the sale of their business, restaurants rushed to strike deals before the end of the year.

Here’s a look at five of the biggest mergers and acquisitions that took place in 2021, the ones that will change the landscape of the chain restaurant industry. For more, check out 9 fast food chains that are phasing out dining rooms.

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One of the biggest acquisitions of the year was RBI’s purchase of Firehouse Subs, a Florida-based sandwich chain. Founded by former firefighter brothers Chris and Robin Sorensen in 1994, Firehouse Subs has grown steadily over the past few decades from a small family business to a chain of more than 1,200 restaurants, with locations in 46 states, in Puerto Rico and Canada. The company has proven resilient during the pandemic, persevering with the development of the Firehouse Subs app and offsite services. RBI, the parent company of Popeyes, Burger King and Tim Hortons, took notice and bought the chain in November for $1 billion. Could Firehouse Subs become the main sandwich player in the hands of one of the biggest restaurant development companies in the business?

Del Taco
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Jack in the Box showed its buying power in early November by acquiring Mexican food chain Del Taco for a whopping $575 million. This decision surprised some. Just three years ago, Jack in the Box wanted to get out of the brand ownership game, getting rid of Qdoba (another Mexican food concept) for $305 million. The West Coast chain, however, hopes things will work out differently this time around and plans to grow its footprint by 4%, capitalizing on Del Taco’s presence in Midwestern and Southern markets like Michigan, Alabama, Georgia and Florida.

hot dog on a stick
Steven B./Yelp

California-based franchise company Fat Brands had another stellar year, adding Global Franchising Group (GFG) to its growing collection of fast food brands. At the time of the sale, which closed in July, GFG’s assets included Round Table Pizza, Great American Cookies, Hotdog on a Stick and Marble Slab Creamery. With the purchase of GFG, Fat Brands has added all of these brands to its roster and hopes to help them grow, giving them access to its extensive network of franchisees and large-scale buying power.

J. Alexandre's restaurant
J.Alexander/Facebook

Quick service chains weren’t the only ones to benefit from mergers and acquisitions. J. Alexander’s Holdings, the parent company of casual dining chain J. Alexander’s Restaurant, sold to SPB Hospitality for $220 million in July. Prior to its acquisition by SPB, J. Alexander’s had been looking for a buyer since mid-2019, after rejecting a preliminary offer from Ancora Advisors in April of that year. Its sales plans have been postponed by COVID and the pandemic, but with casual dining resuming over the past year, the chain wasted no time in striking a deal with SPB.

Anthony's Charcoal Pizza
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Mergers and acquisitions in 2021 weren’t just about big companies gobbling up small ones. In October, upscale burger chain BurgerFi came to the rescue of Anthony’s Coal Fired Pizza & Wings, a debt-ridden pizza chain with 61 restaurants on the South, Southeast and East Coast. The $161.3 million sale was expected to close by the end of the year, with BurgerFi assuming all of Anthony’s debt and giving the pizza chain $33.6 million in company stock . As BurgerFi continues to grow, expanding north from its established markets in Florida, it hopes to benefit from Anthony’s presence on the East Coast.

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