Parent Company of Arby's and Buffalo Wild Wings to Buy Sonic for $2.3 Billion

Last November, Roark Capital, which owns Arby’s® Restaurants Group and has significant stakes in Auntie Anne's, Carvel and Jimmy John's, expanded its empire by announcing that it would be acquiring Buffalo Wild Wings for $2.9 million.

Learn more about how the firm purchased Buffalo Wild Wings just in time for the Super Bowl in the video below.

This year, this company has announced yet another large deal.

Roark will also be acquiring the burger fast food chain Sonic for $2.3 billion.

Sonic, which originally opened as a root beer stand back in 1953, has more than 3,600 stores across the U.S, over 3,000 of which are franchised.

"Sonic shareholders will receive $43.50 per share in cash, which is a 19 percent premium to Sonic's Monday close.The company's stock rose more than 18 percent Tuesday, hitting an all-time high of $44.87 per share," writes "CNBC."

Sonic Drive-in Exterior shot

Sonic, like most staple fast food chains, has struggled to compete in the saturated food market in the last few years. Same-store sales have declined over the last year, but the company did say on an earnings call this month, that the brand expects a 2.5 percent lift in traffic and a 2.6 percent spike in sales at stores that have been open for at least a year.

Roark which formed Inspire Brands in February sees potential in the drive-in restaurant known for its diverse menu, carhops on roller skates, and comedic commercials often set in cars.

"Sonic is a highly differentiated brand and is an ideal fit for the Inspire family," said Paul Brown, CEO of Inspire Brands in a statement.“We have tremendous respect for Sonic’s exceptional team of employees and franchise owners, who have built one of the industry’s most distinctive restaurant brands.”

With this acquisition, the private equity firm Roark will have over 8,000 restaurants in its portfolio with a combined sales of more than $12 billion.

Read more about Arby's parent company buying Sonic at "CNBC."

Meal-Kit Companies Are Gearing Up for Competition or Getting Out

On this episode of The Barron Report, Paul Barron interviews Brittain Ladd, a Supply Chain Management expert and Logistics Consultant for the world of meal kits.  

When the meal kit first came into existence, customers lined up to try this new and innovative system that fulfilled the desire for a high-quality meal without the restaurant price tag. Once the idea gained popularity, meal kit companies began popping up, claiming to have the best meal kit on the market. Slowly but surely, these companies starting shutting down as the market became oversaturated.

“The meal-kit industry is still the wild west. The industry is going through a lot of growing pains...,” says Brittain Ladd.

He believes one of the main reason these companies are unable to stay afloat is they just don’t have enough capital to keep going. One of the biggest challenges for the meal kit is the delivery model and its cost. Known in the restaurant industry as  “the last mile,” these start-ups are struggling to find a location that puts them close enough to a customer in order to keep costs down.

Bigger, established companies like Starbucks or Subway have the most distribution potential with access to resources, real estate, and capital.

Meal kits are a great product–unfortunately, they’re not enough to start a business. Brittain found that many founders of these companies did not have enough business expertise to evolve the idea into a full-fledged business. Consequently, companies faced the harsh reality of high cost-low retention. And although acquisitions may seem like the only light at the end of the tunnel, Brittain sees other opportunities for success.  

“If they’re not going to be acquired, they absolutely should be reaching out to restaurants chains and offering them a branded product or ask them to sell their meal kit exclusively in their store…,” says Ladd. Meal kit companies need to brainstorm a way to close the gap between the product and the consumer.

Listen to this episode of The Barron Report for more insights on the meal kit industry and his recommendations to founders in order to stay afloat!

SHOW NOTES

  • 12:33 Top 5 Companies To Watch

  • 15:34 Restaurants Co-utilizing Space and Meal-kit Delivery System

  • 18:10 Chef’d Biggest Flaw

  • 21:25 Misconceptions Of Success

  • 24:00 Fast Casual New Delivery Systems

  • 30:00 The Future of Meal Kits

  • 33:52 Deliver as Close to the Customer as Possible

  • 00:18 Introductions

  • 01:57 The Demise of Chef'd

  • 02:06 Current Status of the Meal Kit Industry

  • 04:23 Ready-to-eat Meal-Kit Development Ideas

  • 08:08 The Problem with the Meal-kit Industry as a Whole

  • 11:03 Convenience Stores as Distribution Points

 
 

PepsiCo to Acquire SodaStream for $3.2 Billion

The American food, snack, and beverage corporation PepsiCo has announced Monday that it will be buying SodaStream, the Israeli company that sells the popular consumer home carbonation product that turns tap water into sparkling flavored water. 

SodaStream has had an impressive year when it comes to sales. The company's shares have spiked by 80 percent in 2018.

PepsiCo will be buying its former rival SodaStream for $3.2 billion in cash, which is $144 per share. 

SodaStream was founded back in 1991 but was bought by the Israeli firm Soda-Club in 1996, this is when the company's marketing emphasis started to focus more on healthy beverages.

Daniel Birnbaum became SodaStream's CEO in 2007 and believes that under PepsiCo, the company and its products will be taken to the "next level."

 "Today marks an important milestone in the SodaStream journey. It is validation of our mission to bring healthy, convenient and environmentally friendly beverage solutions to consumers around the world. We are honored to be chosen as PepsiCo's beachhead for at home preparation to empower consumers around the world with additional choices," said Birnbaum in a press release. "I am excited our team will have access to PepsiCo's vast capabilities and resources to take us to the next level. This is great news for our consumers, employees and retail partners worldwide." 

This is PepsiCo's latest move to cater to the eco-friendly consumer.  

"Daniel and his leadership team have built an extraordinary company that is offering consumers the ability to make great-tasting beverages while reducing the amount of waste generated. That focus is well-aligned with Performance with Purpose, our philosophy of making more nutritious products while limiting our environmental footprint. Together, we can advance our shared vision of a healthier, more-sustainable planet," said Indra Nooyi, PepsiCo CEO, who is stepping in October. 

Pepsico has also invested in innovative products like the company's Flavorworks program, which offers snack products with exciting recipes. See the recent video below to learn more. 

Learn more about the beverage and snack giant's acquisition of SodaStream at "Quartz."