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."

Is Amazon Intruding or Pushing the Fast-Food Industry Forward?

Is Amazon Intruding or Pushing the Fast-Food Industry Forward?

The fast-food industry is lagging behind and it knows it.

On the other hand, Amazon seems to be moving light speeds ahead in contrast to its food competitors.

Recently, Foodable reported on how Amazon is a brand that is “plugged in” as opposed to the rest of the restaurant industry. Foodable Labs, our sister data company, predicted the Seattle-based company will absorb 25 percent of restaurant visits by the year 2020.

As the logistics, online-retail giant moves forward with its new projects and initiatives, it moves the company closer towards their food logistics goals.

As reported by “Business Insider,” "Amazon is going to try and figure out ... how to use their customer engagement, customer knowledge, and distributions to encroach on anyone's business they can," said Sonic CEO Cliff Hudson.

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Why Are Chain Restaurants Losing Foot Traffic?

Exterior of Pizza Hut 

Exterior of Pizza Hut 

Unfortunately, some major players in the industry have had a tough 2016.

Cosi just filed for bankruptcy and YUM Brands (the parent company of Taco Bell, KFC and Pizza Hut) just announced a sales decline at Pizza Hut.

“The US market was influenced by an unsuccessful promotion and the competitive environment,” said Greg Creed, CEO of YUM Brands.

Sonic drive-in is also not performing as its executives and investors hoped. “The shortfall was largely driven by lower-than-expected traffic, reflecting lower consumer spending in restaurants and continued aggressive competitive activity,” said Cliff Hudson, CEO of Sonic in a press release.

Both of these executives have said their chains are under major pressure from the competitive landscape, meaning other emerging concepts are taking away their customers.

But for some established brands, trying to attract the distracted consumer is the least of their worries. Chipotle, for example, is in full-on recovery mode. The “fresh mex” chain sales have drastically declined due to its food safety crisis, specifically, the brand saw sales decline by 27% for the first half of the year.

So what is costing consumers to not visit these establishments as much? Well, one contributing factor is that commodity prices are down. So eating at home is more appealing to consumers, especially as “food away from home” is on the rise according to this study. Even though lower food costs is also a good thing for restaurants, promotional costs evidently have increase to compete in the market.

The increase in wages has also attributed to the sales decline.

Wage inflation rose by 5% in July, according to William Blair Research. 12 states have increased their minimum wage this year. California, the largest restaurant state experienced a 11% spike in wages from $9 to $10. Read more

Foodable Reveals Five Star Awards, Celebrating Industry's Best

Foodable Reveals Five Star Awards, Celebrating Industry's Best

In the restaurant industry, accreditation is a powerful way to separate the who’s who: which chefs are worth the hype and which ones fall flat. It also brings to light which more obscure establishments are beaming with talent. In the past five years alone, restaurant reviews have changed significantly, with consumers in the driver’s seat, typing away their opinions on platforms like Yelp. There are few institutions, however, that take restaurant reviewing to a more serious level, where a rigid set of guidelines must be met in order to grant the restaurant any published review at all. Michelin is most notably one of them. But what if you took the same type of principles as the Michelin Guide — where a score is based on consistent factors across the board for each restaurant — and brought that into the land of social media, where the analysis of consumer sentiment, engagement and influence in relation to a restaurant determines the ultimate score of achievement?

Enter the Foodable Five Star Awards.

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Will Consumers Ever Get Over the Burger? Sonic's CEO Says Not Anytime Soon

Burgers are all restaurateurs and consumers are talking about lately. After all, we are in the midst of the Burger Boom. But, how long will it really last? According to Cliff Hudson, Sonic Drive-in's CEO the industry has yet to reach "peak burger."

Sonic Drive-in is the largest chain of drive-in restaurants and recently hit double-digit quarterly sales, but it is not because of their hamburgers. Only 17% of the chain's sales are attributed to burgers– 30% are drinks, 10% is ice cream, and another 10% of sales are for chicken. Burgers may be the reason a guest visits the restaurant, but this isn't all they want. They want options and add-ons. 

So what else is causing consumers to flock to Sonic, besides the Burger Boom? Hudson credits it to a combination of things–their business strategy, including a customizable menu, lower gas prices, and the influx of diners fatigued from McDonalds. Read More