Dive Brief:

• Huddle House agreed to purchase the rights to Perkins Restaurant & Bakery for $51.5 million, according to Restaurant Business.
• A leadership team from Huddle House will run Perkins with plans to create a separate sister brand of family restaurants. It does not have any intentions of converting Perkins into Huddle Houses and plans to expand both brands. The combined operations will result in 700 total units with sales of about $800 million. 
• Perkins' other brand, Marie Callender's, is being broken up in a separate sale. The parent company of David's Cookies will purchase the baker operations, Foxtail, for $18.5 million while the restaurant operation is being sold for $1.5 million to Marie Callender's Inc., a newly formed company.

Dive Insight:

While Perkins' sale is no surprise following its parent company's Chapter 11 bankruptcy filing, this year has been quite an active one for mergers and acquisitions. The casual dining segment has been a prime target for takeovers, especially since sales lag behind QSRs. In August, full-service restaurants had soft transactions compared to August 2018 while QSRs boasted same-store sales increases of up to 4.4% during the month, according to an NPD Group report emailed to Restaurant Dive.

Many activist investors are pushing public casual brands to sell, with Red Robin, Bloomin' Brands and J. Alexander's taking the heat this year. Del Frisco's ended up selling to a private equity firm earlier this year following months of activist investor pressure. Brands that are growing also are getting attention from investors, with Cooper's Hawk receiving an investment from Ares Management during the summer. Other casual brands that were sold this year include Pei Wei, P.F. Chang's and Jack's Family Restaurants.

While some full-service brands have been sellers, other have been buyers. The Cheesecake Factory bought Fox Restaurant Concepts for $353 million in August as part of a diversification play. Huddle House's purchase will also provide some diversification while also broadening the brand's footprint with a like-minded chain. It could also help revitalize Perkins, which has been struggling with growth — sales slipped 3.7% in 2018. Huddle House reported sales of $245 million last year and sales rose 2.9%. The restaurant is on a growth path too, with plans to open 12 company-owned restaurants in the next five years. The chain is also looking into a smaller 2,000-square-foot design. Huddle House's desire to evolve and consider new design could be what Perkins needs to get over its sales slump and find new paths for growth.