BBQ Holdings to be acquired by MTY Food Group for $200M

Dive Brief:

BBQ Holdings has entered a definitive merger agreement with MTY Food Group, the companies announced Tuesday. MTY will acquire all issued and outstanding common shares of BBQ for $17.25 per share, or about $200 million in total. The transaction will be 100% funded in cash.
Boards of directors from both companies unanimously approved the transaction, which is expected to close during the fourth quarter. BBQ will then be delisted from NASDAQ and become a privately held subsidiary of MTY. All of BBQ’s restaurants will continue to be operated as independent brands.
Over the last few years, BBQ Holdings has amassed a platform of various restaurants through its own acquisitions, including Village Inn and Bakers Square, Tahoe Joe’s, Granite City and Barrio Queen, to operate over 200 franchised and over 100 corporate restaurants.

Dive Insight:

Under MTY, BBQ Holdings plans to continue executing on its three pillars of growth, BBQ Holdings CEO Jeff Crivello said in a statement. Those strategies include building a diverse portfolio through M&A, driving organic growth and adding brands to other restaurants through ghost kitchen-type formats. The company expected to open 37 ghost kitchens for its Bakers Square brand this year, for example.

BBQ’s strategies have also included exploring new formats for Famous Dave’s, including testing a line-service model and drive-thru and building smaller restaurants. The company has also been opening dual-concept restaurants within the last few months, including a Granite City Brewery and Village Inn in Maple Grove, Minnesota, in May.

BBQ Holdings reported same-store sales growth year-over-year across all its brands during Q1 2022, while its revenue grew about 72% to $64 million year-over-year, according to an earnings release. The company also projects to have 366 units open by the end of the year, of which includes 43 ghost kitchens. BBQ expects to generate system wide sales of between $685 million to $725 million during 2022, according to the press release.

This acquisition will also add nine complementary restaurant brands to MTY’s portfolio of 80 restaurant brands, which will now include more casual and fast casual concepts. The company hasn’t made an acquisition of an American-based company since it bought Papa Murphy’s in 2019. MTY originally established its U.S. presence through an acquisition of Kahala Brands in 2016, according to the release. It also owns Baja Fresh and Coldstone Creamery, according to its website.

Following the acquisition, the company expects its system sales to grow 23% to $3.7 billion. The deal also will expand MTY’s geographic footprint across the U.S., with over 3,900 locations across the country. Its U.S. system sales will also increase from 58% to 66% of total system sales.