‘Art of the Deal’ as Told by FT Dealmakers Winners
Greg Flynn of Flynn Restaurant Group accepted the Franchise Times Deal of the Year award today at the Franchise Times Finance & Growth Conference in the Rio hotel in Las Vegas.
Flynn Restaurant Group passed the $2 billion sales mark with its acquisition last year of U.S. Beef's 368 Arby’s stores, the Franchise Times 2019 Deal of the Year honored today at a gala luncheon at the Finance & Growth Conference in Las Vegas.
Founder Greg Flynn credits his emphasis on running great restaurants for creating a “virtuous cycle” of deal-making, in which new brands that he wishes to enter as a franchisee can examine his successful track record as the best proof of his worthiness as a buyer.
He also urged the audience of lenders, private equity firms, investors, franchisors and operators to go against the herd, buying brands not when they’re hot and thus paying top dollar that can never be reclaimed, but rather buying brands when they’re 10 cents on the dollar.
Despite the size of the firm, Flynn believes there’s more white space. “I’ve been asked many times what’s the limit to your growth. I don’t see why there should be any limit,” Flynn told Franchise Times. “We can do more.”
The deal means diversification for Flynn beyond the 400-plus Applebee’s he owns in casual dining, the 135 Panera locations that represent fast casual and the 280 Taco Bell units at the value end of quick-service restaurants.
“QSR is much bigger than the other segments. I think it’s 70 percent of the entire industry,” said Flynn in an earlier interview with FT’s Nick Upton. “If we are trying to create a portfolio and diversify between the segments and mirror the segments, it was logical for us to have a bigger footprint in QSR.”
Flynn spoke on a panel called “The Art of the Deal,” also featuring two other Franchise Times Dealmakers winners: Heather Elrod, CEO of Amazing Lash Studio, and David Pipes, CFO of Inspire Brands.
Elrod detailed the tricky business of selling a firm owned by the founders, in this case Jessica and Edward Le. Elrod pushed the brand from 75 studios when she came on board to 200-plus at the time of the acquisition by WellBiz Brands. She praises the founders for their vision, and for their willingness to totally leave the brand when it needed to go to the next level.
“Being a founder-led organization, often they become a cork in their own bottle,” she says.
Pipes discussed the formation of Inspire Brands, the new parent company over Arby’s, and the subsequent acquisitions of two publicly held firms, Buffalo Wild Wings and Sonic.
One major attraction of Sonic was its technology, he told Franchise Times. “Sonic has made a lot of investments in technology that we want to utilize across the brands. Their mobile ordering platform is strong,” for example, he says, plus franchise businesses are attractive to lenders and financiers. “They generate a lot of cash.”
In total, 11 companies received awards at the luncheon May 7, a highlight of the Franchise Times Finance & Growth Conference.
DEAL OF THE YEAR 2019:
Flynn Restaurant Group buys U.S. Beef, with 368 Arby’s units, crossing the $2 billion sales threshold.
DEALMAKERS OF THE YEAR 2019 (in alphabetical order):
Amazing Lash Studio attracts WellBiz Brands as strategic buyer from founders, backed by Golub Capital.
ComForCare forms new umbrella company, acquires Care Patrol and partners with Kindred At Home.
Inspire Brands is formed as new Arby’s parent, backed by Roark Capital, buys Buffalo Wild Wings and Sonic in two take-private acquisitions.
Neighborly, re-branded from Dwyer Group, attracts Harvest Partners as new investor; buys Mosquito Joe and Real Property Management among others.
One Cannabis Group merges with One Can Franchise, combining 13 companies with $20 million in revenue under one umbrella.
RGT Management, led by “The Blind Side’s” Sean Tuohy, and Auspex Capital divest 105 restaurants and 55 properties for $213 million in six separate deals.
Sinelli Concepts, parent of Which Wich and Burguesa Burger, buys Paciugo Gelato to enter new segments; also working on Supernova Coffee launch.
Sola Salon Studios attracts family office backers MPK Equity and PNCRiverarch in management-led buyout of founders.
The Learning Experience attracts Golden Gate Capital in management-led acquisition, allowing for growth acceleration and the launch of BubblesU.
SPECIAL ACHIEVEMENT AWARD 2019: Dean Zuccarello of The Cypress Group, for representing U.S. Beef in its sale to Flynn Restaurant Group as well as multiple other deals.
The Franchise Times Dealmakers awards are selected by a panel of judges from nominations submitted in the fourth quarter of each year and covering M&A transactions in franchising for the trailing 18 months ending December 31. Nominations for next year’s project open October 1 at franchisetimes.com.