FSC Franchising buys Newk’s Eatery

Dive Brief:

FSC Franchising, the parent company of Beef ‘O’ Brady’s and The Brass Tap, has acquired Newk’s eatery, according to a press release issued Wednesday. Terms of the acquisition were not disclosed.
Newk’s unit count has fallen considerably since before the COVID-19 pandemic, according the fast casual concept’s franchise disclosure document. It dropped from about 122 units at the start of 2020 to 100 at the end of 2022.
FSC said Newk’s footprint, primarily in the Southeastern U.S. and in Texas, makes it a good compliment to FSC’s existing brands, which expect significant franchising growth in the coming years.

Dive Insight:

FSC plans to grow Newk’s store count by 10-15 units per year, the company said in the release. FSC CEO Chris Elliott said it was franchisees of one brandc could become multi-unit operators across FSC’s brand system. Elliott also said the brands complement each other, and predicted the company’s EBITDA would increase.

“Our EBITDA growth this year was a very healthy 15%, and it's planned to be 15% next year,” Elliott said. The company has plans to open 23 Beef ‘O’ Brady’s and Brass Tap locations next year. In 2023, FSC opened 10 Brass Taps and one Beef ‘O’ Brady’s, while signing franchise deals for 36 and four more, respectively.

Newk’s, despite its shrinking unit count, has an AUV of about $2.2 million, according to the press release. According to its FDD, the chain sells a mixture of salads, sandwiches, pizzas, soups and cakes. Beef ‘O’ Brady’s, by contrast, is a sports pub focusing on wings, burgers, steak and some seafood, according the press release. The Brass Tap is a craft beer concept. FSC did not immediately respond to a request to clarify what synergies the brands had with its existing portfolio, to which it referred in its press release.

Elliott said the brands are in a good place to expand, in terms of staffing, "our restaurant turnover has improved significantly, and the corporate offices are very stable in terms of team members. We take a lot of pride in not having a lot of 'churn and burn,' and we're really excited about the future of these brands with the team we have on board."