Value Add’s Post

Burger King was a $10 billion private equity mega deal. The kind that demonstrates the immense potential of a well-executed turnaround or buyout. $10 billion profit netted by shareholders in 7 years. ⏺ Let's look at the sequence of events: - In 2010, 3G acquired Burger King for $3.3 billion, $4 billion including debt - In 2012 they reported a 49% increase in earnings and - Sold a stake to Justice Holdings at an $8 billion valuation - Two years later it was merged with Tim Hortons to form Restaurant Brands International to create the third largest quick-service restaurant company in the world. 🔽 You have to ask, how does a change in material ownership of a business lead to a $10B gain. I’d argue that part of it is renewed vision and alternative perspectives. ⏺ But the other part of the answer is more formulaic. It always boils down to the correct and timely activation of these activities: 1) Operational improvement 2) Strategic repositioning 3) Revenue growth 4) Financial engineering 5) Leadership development 6) Mergers and Acquisitions 7) Governance enhancements 8) Digital transformation and technology 9) Market timing ❇️So how did 3G drive this with Burger King? - Strategic restructuring: moved to a franchise-based model and improved EBITDA margins from 23% to 43%. - Operational overhaul: Adopted zero-based budgeting and slashed overhead costs. Bernardo Hees was named CEO, with a track record in one of the most successful turnarounds of one of Brazil’s largest railroad and logistics companies. He was also known for cost-cutting and operational improvement. - Menu revamp and diversification: Rebranded the chain, opened up to a wider audience and increased share of wallet. - Global expansion: Targeted emerging markets.The North American market was saturated but emerging markets, not so much. - Technological integration: Modern POS systems to mobile apps. Remember this was a time when digital transformation was just taking form as a discipline. - Strategic merger: This was the kicker. Merging with Tim Horton’s they created one of the largest quick-service food chains in the world. A true masterclass in private equity success. Someone lost $10 billion in potential profits and the other gained $10 billion. Imagine watching that story unfold after you’ve sold… “The burgers are better at Burger King” Suncore Data

Here are 5 Ways the post-COVID Economy is Affecting Restaurant M+A Deal Flow:⁠ ⁠ 1. Bankruptcies and closures hit hard across industries. From Crumbl to Body Shop and Tuesday Morning, closures range from quiet to sudden (Foxtrot). While 2023 bankruptcies are down, the industry sees corporate (Boston Market, Corner Bakery) and multi-unit franchisee owner (MUFO) bankruptcies (BK, Hardee's, Bojangles, Popeyes)..⁠ ⁠ 2. MUFO Consolidation: Deals are quietly reshaping the landscape for established brands, especially among smaller units facing financial strains and remodel demands. Strongly capitalized MUFOs find this a strategic growth route amid challenging real estate dynamics.⁠ ⁠ 3. Big Deals: Despite economic uncertainties, notable transactions reflect resilience and future adaptability. Subway ($9.6B), Benihana ($365MM), Pollo Tropical ($255MM), Ruth's Chris ($715MM), and the latest, rumored at $2B, Tropical Smoothie exemplify this trend.⁠ ⁠ 4. Opportunistic Strategic Acquisition: Virtual brands witness consolidation as players like Nazarian seek valuable intellectual property (Kitchen United), while BiteLabs acquires adjacent competitors (Hungry House, MegaBite). Niche brands like Juice Bar and Crust Club also merge into larger, well-capitalized companies for footprint and offering expansion.⁠ ⁠ 5. Creative Deal Structures Abound. The Spice Must Flow! Expect deals with diverse financing and structures. Trends include earn-outs, asset purchases, minority stakes, multi-round rights, cash-only transactions, owner financing, and private credit. Even crowdfunding and IPOs are emerging, creatively utilized by younger brands and emerging multi-brand holders.⁠ ⁠ Follow us to get regular thoughts on leadership and honest journey of entrepreneurship, investment, and radical change in the restaurant industry! 💡

Bloomin' Brands may be finally blooming. It's clear both during and after Covid that the restaurant landscape has changed. The dynamics of the restaurant business have gone through the very evident destruction of the mom-and-pop local independent food restaurants to the quite stunning transition to delivery business spurred by Uber and Doordash. The moniker ghost kitchen belies the progressive and lucrative growth of digital-only restaurants. If you think Uber and outsourcing only affected global transportation, think again. Covid will go down for years as an incredibly disruptive event that has created unforeseen changes in almost every aspect of life. But back to Bloomin' Brands and what was an announcement that reaffirms a pre-covid trend of mergers and acquisitions in the restaurant space. The WSJ reported that investment advisor and activist, Starboard Value, had taken a more than 9.9% position in the company. Starboard's history as a hedge fund taking positions in consumer brands like Darden Restaurants, Papa John's, and Smithfield Foods, to name a few. Read more: https://hubs.la/Q01_CTHp0

Woke up to read the news of Apollo Global Management, Inc. acquiring The Restaurant Group plc for a $623M deal on The Moodie Davitt Report. As a family, we got hooked on to the wagamama concept in London way back in 2017 (the concept opened way back in 1992 and we were fashionably late!) and have loved it ever since. Hence, this deal is of personal interest as well! While there remain intense activities in terms of acquisitions in the US region (Lagardère Travel Retail acquiring Tastes On The Fly), Apollo Global Management, Inc.foray into the UK / Europe region with this acquisition can be a strategic extension of its earlier US-centric focus on restaurant and entertainment business such as Chuck E. Cheese restaurant chain. With 70% of current revenues generated from UK airports and now, with the access to capital and a long term investment approach, I will look out for 2-3 things to unfold going forth for The Restaurant Group plc :: 1. An increased focus on diversification onto other European airports 2. A detailed review of the railway arm of the business 3. Strategic expansion of some brands into the US airports I believe the competitive landscape has just got even more interesting, with some more acquisitions on the way. Once the hype of the varied acquisition settles, it will be an astute focus on robust operational efficiencies and smarter integration of technology that will differentiate the eventual winners and losers. A great recap article by Ameesha Raizada! The Moodie Davitt Report tRetail Labs #creatingtomorrow #airportfoodandbeverage

In the 2020s, your choices will matter more than in most decades. It is a decade of immense change, and this IPO is a great example of conundrum faced by investors and employees. Cava IPOed and within it we study it as an example. Animal spirits appeared to return in the markets this week, with an IPO by a US restaurant chain being a sign of euphoria amongst investors. Cava, the US restaurant chain, almost doubled on its launch. Guidance up from $17 - $19, eventually launched at the top end of the new guidance at $22, before rocketing to $42. Management of the firm may be a little irritated with JP Morgan and Jeffries, as a doubling of the price on the first day could be a sign that the arrangers misjudged market conditions. However, it has been a difficult market to judge. Bearish sentiment, arguably of three years (Covid and then the Ukraine war), seems to be giving way to signs of optimism. Underweight positioning shifting can cause dramatic moves, and that is may be the kindest narrative for the two M&A arrangers. The bears would point to a company that has circa $59 mn losses, at a valuation of close to $5bn (at $43.78 share price) being a sign of 'crazy markets' due for a fall. Would you move jobs to a company that is losing money? However, you look under the hood and you see a company with a single production site (30,000 sq foot central kitchen in Maryland), offering a simple mediterranean menu, through growing restaurants, but also across a comprehensive digital platform (pick up to delivery), and all of a sudden you see it's growth potential. As an employee you could be in on the ground floor of a winning restaurant chain, built on scalable tech. Further for a company that started in 2006, it is clear its management know a thing or two about surviving tough market conditions and growth. This company looks interesting as it has a management team building a brand that aligns with contemporary consumer values and needs, based on scalable tech and physical infrastructure. Would I buy it? Probably not right now. But is it a clear cut case of market in a bubble? No it isn't. It is a perfect exemplar of the quandary investors and employees are facing. If your company is of the old mould: i.e. with no tech infrastructure, not catering to the wants of consumers, then is it just a matter of time before your job is vulnerable? Do you join fast growing new companies investing in the latest methods, and risk positions where you have built up years of credibility and trust? You can find it's SEC filing of its offering memorandum by Googling it. It is interesting reading. We discuss the fast changing world of work, business, tech - the 2020s are going to be like a whirlwind. Join us on the journey via our newsletter. Subscribe on LinkedIn https://lnkd.in/ejh68RTm https://lnkd.in/eYAmfRHR

Bloomin' Brands may be finally blooming. It's clear both during and after Covid that the restaurant landscape has changed. The dynamics of the restaurant business have gone through the very evident destruction of the mom-and-pop local independent food restaurants to the quite stunning transition to delivery business spurred by Uber and Doordash. The moniker ghost kitchen belies the progressive and lucrative growth of digital-only restaurants. If you think Uber and outsourcing only affected global transportation, think again. Covid will go down for years as an incredibly disruptive event that has created unforeseen changes in almost every aspect of life. But back to Bloomin' Brands and what was an announcement that reaffirms a pre-covid trend of mergers and acquisitions in the restaurant space. The WSJ reported that investment advisor and activist, Starboard Value, had taken a more than 9.9% position in the company. Starboard's history as a hedge fund taking positions in consumer brands like Darden Restaurants, Papa John's, and Smithfield Foods, to name a few. Read more: https://hubs.la/Q01_CNw00

🚀🌯 3 Reasons #ChipotleStock is a No-Brainer Buy, As Soon As This 1 Thing Happens! 💰💥 #businessnews #innovation #success #business #entrepreneur #TrendingNow #MakeMoney #creativity #technology #personaldevelopment #motivation #selfhelp #management #leadership #marketing #economy #future #businessintelligence #startups #investing

Bloomin' Brands may be finally blooming. It's clear both during and after Covid that the restaurant landscape has changed. The dynamics of the restaurant business have gone through the very evident destruction of the mom-and-pop local independent food restaurants to the quite stunning transition to delivery business spurred by Uber and Doordash. The moniker ghost kitchen belies the progressive and lucrative growth of digital-only restaurants. If you think Uber and outsourcing only affected global transportation, think again. Covid will go down for years as an incredibly disruptive event that has created unforeseen changes in almost every aspect of life. But back to Bloomin' Brands and what was an announcement that reaffirms a pre-covid trend of mergers and acquisitions in the restaurant space. The WSJ reported that investment advisor and activist, Starboard Value, had taken a more than 9.9% position in the company. Starboard's history as a hedge fund taking positions in consumer brands like Darden Restaurants, Papa John's, and Smithfield Foods, to name a few. Read more: https://hubs.la/Q01_CK0n0