Dive Brief:

• BBQ Holdings, parent company of Famous Dave's, Granite City Food and Brewery and other full-service restaurant chains, has agreed to buy Tahoe Joe's Famous Steakhouses, the company announced Wednesday. The company snagged Tahoe Joe's through a bankruptcy auction of its parent company, Fresh Acquisitions, and paid $5.2 million for the chain, Restaurant Business reports. 
• The purchase of the five-unit chain is expected to close Friday and is BBQ Holdings' second acquisition this year — the restaurant group bought Village Inn and Bakers Square from VIBSQ, LLC for $13.5 million in June. 
• The deal also includes the intellectual property of Home Town Buffet, Ryans, Furr's Fresh Buffet and Old Country Buffet. BBQ Holdings has no immediate plans to reopen these buffet chains, however, according to the release.

Dive Insight:

BBQ Holdings CEO Jeff Crivello said in the release that "accretive and strategic M&A" is one of the company's three growth pillars. The company's leading expansion strategies, however, are leveraging current restaurant units for ghost kitchens, virtual brands and dual concepts and opening new units, Crivello said. 

Crivello told Restaurant Business that Tahoe Joe's could pose another cobranding opportunity for Famous Dave's. Famous Dave's signed a 25-unit development deal with its franchisee Bluestone Hospitality Group in 2020 to grow through ghost kitchens and co-branded restaurants with the company's Johnny Carino's restaurant chain. It has also opened eight company-owned Famous Dave's ghost kitchens within its Granite City locations, according to the press release. 

The restaurant group has a history of purchasing restaurants just out of bankruptcy. Distressed deals allow companies to buy well-known brands cheaply and restructure and reinvigorate them under new management.

BBQ Holdings made its first acquisition last year when it bought Granite City Food and Brewery for an undisclosed sum a few months after Granite declared bankrptucy. Village Inn and Bakers Square's parent company, formerly American Blue Ribbon Holdings, declared bankrptucy in January 2020. BBQ Holdings plans to use that acquisition as a way to add pies to Famous Dave's menu and create a broader distribution network of Bakers Square's pies.

Granite City has shown some signs of recovery post-pandemic, boosting same-store sales by nearly 140% in Q2 2021 compared to the year-ago quarter. But the chain still hasn't quite caught up to same-store sales compared to pre-pandemic, with same-store sales declining 10.4% compared to Q2 2019. 

The chain is also growing its footprint by creating new restaurant concepts as well. In 2019, BBQ Holdings opened an upscale barbecue concept called Clark Crew BBQ in Oklahoma City, and launched fast casual brand Real Famous Barbecue in Provo, Utah, in January 2020. The company created this brand alongside Ascend Hospitality Group. BBQ Holdings is also piloting a line-service model this year and is exploring drive-thrus. 

"The consumer is demanding a faster, more convenient service model, with real ingredients.," Crivello said in January 2020 of its fast casual concept. 

Despite its goals to become a multi-branded powerhouse, it's not surprising BBQ Holdings isn't interested in resurrecting the cluster of shuttered buffet chains it gains through the Tahoe Joe's acquisition. The segment has been gutted by pandemic dining room restrictions and consumer concern over shared food and utensils as the delta variant continues to proliferate. 

Tahoe Joe's is also a more natural fit for BBQ Holdings' portfolio. The 26-year-old brand is meat-forward like BBQ Holdings' other brands, and is known for steaks, burgers, pork chops and shrimp.