Dive Brief:
- Salad and Go has received approval from a U.S. Bankruptcy Court for its $123 million sale of at least 60 former Salad and Go drive-thru location leases to 7 Brew, according to a press release from global law firm Reed Smith, which represented the debtor.
- The transaction is expected to pay the salad chain’s unsecured creditors in full, which Reed Smith said is “an exceptionally rare outcome in a Chapter 11 case.”
- The approval comes about two months after Salad and Go filed for Chapter 11 bankruptcy and closed 70 stores.
Dive Insight:
At the start of the bankruptcy process, Dutch Bros said it had reached a $105 million private sale agreement with the salad chain, covering the real estate and site assets of up to 65 units. However, 7 Brew said it had also expressed interest and criticized the private sale agreement, as it was in the process of submitting its own bid for a higher amount.
7 Brew’s bid is about $18.5 million higher than the original offer from Dutch Bros, Reed Smith said. The sale includes leases from roughly 36 locations in Arizona, 19 in Texas, three in Nevada and five in Oklahoma, per the release. Dutch Bros was listed as the backup bidder.
The drive-thru chain’s original bid was for $143 million for 73 sites, so it’s possible that some landlords did not approve of their leases being turned over to 7 Brew. Some locations may have been too close to another coffee shop, or did not work with the current tenant mix.
The sale will help accelerate 7 Brew’s unit count growth as it continues toward the 1,000-store mark. Earlier this year it surpassed 777 units and it continues to rapidly open new units across the country. As of August, the chain said it had over 800 stands across 38 units.
Clarification: The article was updated to provide the actual amount of units sold to 7 Brew.
