With interest rates high this year, acquisition activity slowed, but didn’t stop. Private equity firm Blackstone made billion-dollar offers for Jersey Mike’s and Tropical Smoothie Cafe. Companies also made plays for bankrupt brands like Red Lobster, Rubio’s and Buca Di Beppo.
“If there was a good deal, they were going to get done,” Mark Wasilefsky, head of restaurant franchise finance group at TD Bank, said. “If it costs them a little bit more, they build that into the return model. They’ll figure out a way to make that up or lower their overall return.”
The high valuations seen in the Jersey Mike’s transaction and Roark’s 2023 buyout of Subway bode well for 2025, Ab Igram, executive director of the Tariq Farid Franchising Institute at Babson College, said.
Although they were not always among the largest transactions, franchisees also were active acquirers this year. Thrive Restaurant Group bought Modern Market Eatery, KBP brands acquired 85 Sonic units and Sun Holdings bought its second brand in the past five years with its purchase of Freebirds World Burrito.
2025 looks better than 2024, but Igram cautioned “acquirers, private equity firms, investors will continue to be selective.”
Check out the biggest transactions in the restaurant sector this year.
