Dive Brief:
- Fatburger owner, FAT Brands, acquired Yalla Mediterranean, a Los Angeles-based Mediterranean restaurant, for an undisclosed amount, according to a press release.
- Under FAT Brands, Yalla, which currently has seven locations in northern and southern California, will be able to further grow its footprint in the state and expand into new markets.
- FAT Brands franchises over 300 restaurants globally and has over 300 restaurants under development in 32 countries and annual sales of over $300 million. FAT Brands also owns Fatburger, Buffalo's Cafe, Buffalo's express, Hurricane Grill & Wings and Ponderosa and Bonanza Steakhouses.
Dive Insight:
Mediterranean-style restaurants are quickly becoming hot-ticket investments driven by strong consumer demands for healthier quick-service options. The number of Greek items on menus increased 13% over the last 10 years, and taziki sauce, a popular Greek cucumber yogurt sauce, is now on 41% more quick-service menus compared to 2013, according to QSR Magazine.
FAT Brands joins other restaurant groups looking to build out their Mediterranean portfolios. In October Elite Restaurant Group finalized its purchase of Noon Mediterranean months after it took over Daphne's from Victory Park Capital. While Noon filed for bankruptcy in April, the chain was once predicted to see major growth, landing $20 million in private funding in 2017 — a signal that investors likely saw potential in its flavor profiles and concept.
Many smaller players, including Yalla, have been looking to franchise and expand as well. CAVA became the largest operator in the Mediterranean restaurant space after it bought Zoe's Kitchen for $300 million in August growing from its 66 locations to over 300 with the addition of Zoe's 261 locations. Roti received $23 million in equity investment in March to help it grow, while Taziki's Mediterranean Cafe is in the process of renovating and building up its online and to-go ordering, on which sales skyrocketed 200% this year.
Yalla was created as a new concept spin-off of Daphne's when it was owned by Victory Park Capital in 2015, according to Nation's Restaurant News. Initially, the company planned to convert the 23-unit Daphne's into Yalla-branded restaurants, but ended up divesting Daphne's while keeping the Yalla restaurants. Yalla, which has a menu that includes vegetarian, vegan, gluten-free and dairy-free options, also is known for its use of compostable silverware and responsibly sourced meats. It also offers on-tap craft beer and wines.
FAT Brands was originally formed in March 2017 as a wholly owned subsidiary of Fog Cutter Capital Group to complete an IPO that can acquire and conduct business previously done through subsidiaries of the holding group. Since then it has been quickly gobbling up additional brands. It bought Hurricane Grill & Wings for $12.5 million in July and Ponderosa and Bonanza Steakhouses in November 2017, and its latest acquisition rounds out its portfolio.
