Fast food giant Arby’s Restaurant Group is getting into the sit-down casual dining business, announcing a deal Tuesday to acquire the Buffalo Wild Wings chain in a nearly $3 billion transaction.
Sandy Springs-based Arby’s, backed by the Roark Capital Group private equity firm, said it would buy the sports bar and wings chain for $157 per share in cash and assume debt as part of the deal.
The deal comes as the casual sit-down restaurant segment has come under pressure from changing dining habits and a squeeze in labor costs. The segment also has been challenged by fast-casual competitors and many consumers eschewing chains for locally-owned eateries.
Arby’s, meanwhile, has spent years retooling its marketing operations and menu, rolling out the quirky “We have the meats” slogan and offering new products such as turkey legs and venison sandwiches.
“Buffalo Wild Wings is one of the most distinctive and successful entertainment and casual dining restaurant companies in America,” Paul Brown, CEO of Arby’s, said in a news release. “We are excited to welcome a brand with such a rich heritage, led by an exceptionally talented team. We look forward to leveraging the combined strengths of both organizations into a truly differentiated and transformative multi-brand restaurant company.”
Arby’s is controlled by Roark, a private equity group that specializes in restaurants and franchised brands and which is based in metro Atlanta. Roark also controls fast-casual brands including Corner Bakery, Carvel Ice Cream, Moe’s Southwest Grill and Scholtzsky’s.
Arby’s has more than 3,300 restaurants worldwide. Buffalo Wild Wings has 1,250 owned and franchised locations across 10 countries, the company said. It’s Atlanta area locations include Alpharetta, Buford, Douglasville, Hiram and Peachtree Corners.
The deal is expected to close in the first quarter of next year, pending approval of Buffalo Wild Wings’ shareholders. A major shareholder of the company, Marcato Capital Management, which controls about 6.4 percent of outstanding Buffalo Wild Wings shares, agreed to the deal, the release said.
“We are excited about this merger and confident Arby’s represents an excellent partner for Buffalo Wild Wings,” Sally Smith, CEO of Buffalo Wild Wings, said in the release.
Smith said the company’s leadership is “confident that the strength of our two industry-leading brands, under the sponsorship of Roark Capital – an experienced restaurant and food service investor – will enable us to capitalize on significant growth opportunities in the years ahead.”
Cost of commodities such as chicken wings put a damper on Buffalo Wild Wings’ performance in recent quarters, and the company has instituted cost-cutting measures as a result.
Buffalo Wild Wings reported total revenue of $496.7 million in the third quarter, up 0.5 percent compared to the same period in 2016. But same-store sales declined in the quarter by 2.3 percent in company-owned locations 3.2 percent in franchised locations.
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