- BBQ Holdings will acquire family dining brand Village Inn and Bakers Square from owner VIBSQ, LLC, for $13.5 million, according to an SEC filing.
- Village Inn, which has 21 company-owned units and 114 franchised restaurants, 13-unit Bakers Square will become wholly owned subsidiaries of BBQ Holdings. The transaction is expected to close by the end of July.
- This deal marks BBQ Holdings' first acquisition since it bought Granite City Food & Brewery and independent restaurant Real Urban in 2020.
BBQ Holdings' latest purchase is the next step in its acquisition strategy. In April, it said it intended to buy more companies and was evaluating multiple opportunities. Its targets are legacy brands with franchise systems that have potential for growth, which is where Village Inn and Bakers Square fall.
"We believe the Village Inn and Bakers Square concepts are a great complement to our growing portfolio of restaurants," BBQ Holdings CEO Jeff Crivello said in a press release. "Adding them to our family of brands will only strengthen our company as a whole."
BBQ Holdings could have its hands full, however, with its two latest brands. Family dining has struggled the most in recent quarters, declining two-year comp sales by 25.9% in Q4 2020 and by 20.5% in Q1 2021, according to Black Box Intelligence data shared during a May webinar.
Village Inn and Bakers Square parent company, formerly American Blue Ribbon Holdings, also declared bankruptcy in January 2020, selling 34 Village Inn restaurants to franchisees in July 2020. The pandemic didn't help the company either, with court filings saying year-over-year profits plummeted. It emerged from bankruptcy in September as two companies. VIBSQ ran its restaurant brands and Legendary Bakery oversaw its baked-good manufacturing facility.
American Blue Ribbon didn't have any debt when it went into bankruptcy, relying on a related company ABRH, which operates O'Charley's and Ninety Nine Restaurants, to support its losses. ABRH stopped helping the company early 2020, which is why American Blue Ribbon declared bankruptcy, according to Restaurant Business.
BBQ Holdings has experience with formerly bankrupt companies, which will help it as it takes on its latest brands. Granite City, for example, declared bankruptcy December 2019. While the pandemic disrupted its plans to grow Granite City — same-store sales declined nearly 26% in Q3 2020 — easing of restrictions has been helpful to recoup lost sales and the brand is seeing sales move closer to 2019 levels, Crivello said in BBQ Holdings' Q1 2021 earnings. Granite City's same-store sales increased 3% in Q1 2021 compared to the previous year’s quarter. Most recent months also reveal that same-store sales are dramatically rebounding as well, increasing 117% in March and 371% in April.
Better economic conditions will likely help Village Inn and Bakers Square recover, especially as they will have backing of a company that is posting positive revenue gains. BBQ Holdings' revenue increased 56.4% in Q1 2021 to $37.3 million compared to Q1 2020. Systemwide restaurant sales increased 33% to $87 million in Q1 2021.