- Investment firm ICV Partners has completed its acquisition of Diversified Restaurant Holdings, a Buffalo Wild Wings franchisee, for $130 million. Concurrently, ICV sold 22 of the 64 acquired units to the brand's franchisor, Inspire Brands, according to Restaurant Business.
- ICV previously acquired JK&T, another Buffalo Wild Wings franchisee, which Inspire Brands has agreed to further develop with 15 new locations. In total, ICV will operate 80 Buffalo Wild Wings locations in five states.
- ICV will combine Diversified and JK&T, which it acquired in 2019, into a new operator called JK&T Wings.
With these deals, ICV becomes the largest Buffalo Wild Wings franchisee in the system and the plan is to keep growing. ICV's footprint is broad and spans a number of industries. Infrastructure and resources like this should support these growth plans. In a news release, Sheldon Howell, ICV principal, said, "We have experience building companies with multi-unit operations and look forward to applying significant resources and pursuing numerous growth avenues, including opening new restaurants and identifying select acquisitions, that will further expand this outstanding brand."
The Diversified sale of 22 units to Inspire is a bit more interesting, as it is rare for a franchisor to buy back franchisee-owned units, but they do happen, according to Restaurant Business. In March 2018, Arby’s acquired 40 restaurants from an operator. Last summer, Chili's owner Brinker International acquired 116 restaurants from a franchisee. Sonic bought 73 units from a bankrupt franchisee in February.
These types of acquisitions are typically made to enable the franchisor to improve the operating performance of the franchisees' restaurants. No financial information was provided about Diversified, or the 22 restaurants that were sold, however. If a turnaround is indeed the driver here, Inspire would perhaps sell those units back to a franchisee after such improvement, especially considering the path to growth typically goes through franchisees who supply upfront capital and are motivated to succeed.
This trajectory would also make sense for Inspire Brands, which has plans to "be known as the preferred franchisor," as CEO Paul Brown told QSR Magazine in 2018.
However, Inspire could also very well keep those units under its own purview, as the company operates thousands of locations. This is a differentiator from other holding companies, according to Brown, as it provides Inspire with that a front line point-of-view before making any major decisions.
Inspire acquired Buffalo Wild Wings in early 2018 and has since updated the menu and restaurant design. Perhaps any further updates along these lines will come from having that operator perspective from the additional 22 restaurants.