Dive Brief:
- JRI Hospitality, a Kansas-based, multi-brand restaurant operator, is buying HCI Hospitality and the 43 Freddy’s Frozen Custard & Steakburgers in its portfolio, according to a Monday press release.
- The acquisition adds to JRI’s existing 88 Freddy’s restaurants, bringing its total to about 130 locations across 18 states, or just over a fifth of the fast casual brand’s 580 restaurants.
- HCI’s CEO Cam Blakely will join JRI as its president of Freddy’s operations to assist in the integration of the two operators’ systems.
Dive Insight:
The acquisition increases JRI’s already sizable holdings and Jason Ingermanson, the founder and CEO of JRI, said the two operators are a natural fit.
“[HCI’s] reputation, consistent performance, and commitment to integrity and quality align closely with our own values, and we look forward to continuing to bring unique, memorable experiences for our guests,” Ingermanson said.
Freddy’s has grown its system, particularly its franchised units, considerably in recent years, from 421 total units at the start of 2022, according to its franchise disclosure document, to about 580 today, according to a recent press release. In 2024, the chain launched a training center in Kansas for new franchisees and managers to support its growth plans.
Last year, Rhône, a major private equity firm, acquired Freddy’s from Thompson Street Capital Partners with plans to continue the brand’s expansion.
As consumer price sensitivity has disrupted the QSR and fast casual sectors, Freddy’s has deployed a number of limited-time menu items and value offerings to boost its sales. Last week, the chain added senior meals for guests over the age of 55 to its permanent menu in a move meant to offer value to a particular consumer demographic. The brand also launched a one-day, $1 double cheeseburger promotion in February. The chain announced the addition of several hot honey chicken items and an LTO shake earlier this week.
Despite this strategy focused on value and menu innovation, Freddy’s has faced challenges, with operator M&M Custard filing for Chapter 11 bankruptcy late last year due to underperformance in the Chicago market.
The acquisition includes two other brands operated by HCI, JC's BBQ & Grill, and Powercat Sports Grill, but not Booth Creek Wagyu or other restaurants operated by HCI, according to its website. Per the press release, HCI Hospitality Founder Dave Dreiling will continue to own and operate Booth Creek Wagyu.
