Yum! Brands, the parent company of chains like Taco Bell and Pizza Hut, started talks of future acquisitions back in October of 2019. David Gibbs, the company’s new CEO, teased that he had his sights set on an acquisition, but would remain tightlipped until he officially took up his new position in 2020. The year is young, but Gibbs’ plans were revealed yesterday as the company announced an acquisition agreement with The Habit Restaurants (The Habit Burger Grill). The restaurant chain’s board of directors unanimously approved the transaction in which Yum! Brands will acquire the company’s outstanding common shares for a total of roughly $375 million.
“We’ve emerged from our three-year transformation stronger and in a better position to accelerate the growth of our existing brands and leverage our scale to unlock value from strategic acquisitions. As a fast-casual concept with strong unit economics, The Habit Burger Grill is a fantastic addition to the Yum! family and has significant untapped growth potential in the U.S. and internationally,” Gibbs said. “With its delicious burgers and fresh proteins chargrilled over an open flame, The Habit Burger Grill offers consumers a diverse, California-style menu with premium ingredients at a QSR-like value. The transaction is a win-win because it allows us to offer an exciting new investment to our franchisees and to expand an award-winning, trend-forward brand through the power of Yum!’s unmatched scale and strengths in franchising, purchasing, and brand-building.”
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According to a press release, Yum! Brands is one of the world’s largest restaurant companies in terms of units, and parent to the chains KFC, Pizza Hut, and Taco Bell. The Habit Burger Grill offers a flavor-forward variety of made-to-order items uniquely chargrilled over an open flame. The Habit Burger Grill operates nearly 300 company-owned and franchised restaurants across the U.S. and in China. Yum! Brands estimates minimal impact to non-GAAP earnings per share before special items in 2020, with accretion beginning in 2021 and increasing thereafter.
“Over the past few years, we’ve focused on becoming a total access brand by growing our delivery business, expanding our online ordering and mobile channels, and enhancing the in-store experience by introducing drive-thrus, kiosks, and technology-centric solutions for operations,” Russell Bendel, President and Chief Executive Officer of The Habit Burger Grill, said. “We’re proud that these and other actions have made The Habit Burger Grill an attractive candidate for a transaction of this kind. On behalf of The Habit Burger Grill Board of Directors, this transaction represents an exciting new chapter to strengthen and significantly grow The Habit Burger Grill by leveraging Yum! Brands’ global scale, resources, and franchising capabilities. We’re confident the agreement delivers immediate value to The Habit Burger Grill shareholders and will greatly benefit our beloved brand, team members, franchisees, and loyal guests for many years to come.”
Congratulations to Yum! Brands on this exciting acquisition! For more movement on the foodservice scene, keep checking in with Deli Market News.