Dive Brief:
- Foodtastic, a multi-brand Canadian franchisor, will acquire Freshii, a Canadian fast casual brand with at least 37 U.S. units, for CA $74.4 million ($54.5 million), the companies announced Monday.
- The deal pays Freshii’s shareholders a significant cash premium, CA $2.30 ($1.69) per share, which is 148% above the stock’s average price over the preceding 20 days.
- Freshii saw its North American unit count fall from 343 to 332 between Sept. 2021 and Sept. 2022, and its cash on hand fall from CA $37,091,000 ($27,180,000) to CA $22,419,000 ($16,428,000) during the same period, a 39.5% drop, according to filings with Canadian Securities Administrators.
Dive Insight:
Although Freshii had a development pipeline of about 125 units, sales from its North American franchise stores, the bulk of its unit count, fell 7% year-over-year in Q3 2022. This was driven by an 11% contraction in same store sales, which Freshii attributed to diners returning to dine-in, lagging office traffic during the lunch and breakfast dayparts and high inflation.
Daniel Haroun, CEO of Freshii, said in a press release that the acquisition might strengthen the brand.
“We believe that this combination will improve Freshii’s potential for growth, enhance franchisee profitability, and generate additional opportunities for our CPG business,” Haroun said.
According to the press release, Foodtastic operates about 1,200 Canadian and 150 international units. Second Cup, Pita Pit, Milestones, Fionn MacCool's, Shoeless Joe's, Au Coq, La Belle et La Boeuf, and Monza comprise the company’s brand holdings.
Freshii is the second brand acquired by Foodtastic this month. The Canadian company announced it was acquiring Quesada, a Canadian burrito chain with around 175 units, on Dec. 2.
The Freshii acquisition is slated to close by the end of Q1 2023, “subject to receipt of the required shareholder and court approvals and other customary closing conditions.”
