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Yum! Brands, Inc estimates the acquisition of The Habit Burger Grill will cost approximately US$375 million in total. (Photo: American City Business Journals)

KFC parent company buys burger chain

Yum! Brands, Inc estimates the acquisition of The Habit Burger Grill will cost approximately US$375 million in total. (Photo: American City Business Journals)

Yum! Brands, Inc — the parent company for KFC, Pizza Hut and Taco Bell —announced yesterday that it has reached an agreement to acquire “fast-casual” chain The Habit Burger Grill.

In a press release from Yum! Brands, Inc, the company said it will purchase all issued and outstanding shares held by The Habit Burger Grill for US$14 per share in cash. Further, the fast-food group revealed that it estimates the acquisition to cost approximately US$375 million in total.

According to Yahoo! Finance Editor-at-Large Brian Sozzi, the valuation of the shares “represents a 33 per cent premium over Habit’s January 3 closing price”.

“The board of directors of The Habit Burger Grill, acting on the recommendation of a special committee composed of non-executive independent directors, has unanimously approved the transaction,” the release stated.

The Habit Burger Grill manages almost 300 company-owned and franchised restaurants across the United States and China. (Photo: Business Wire)

Already the world’s largest restaurant company in terms of units, Yum! Brands, Inc will add almost 300 outlets to its network of fast-food stores with the acquisition of The Habit Burger Grill.

Commenting on the importance of the transaction, Chief Executive Officer of Yum! Brands David Gibbs said, “We’ve emerged from our three-year transformation stronger and in a better position to accelerate the growth of our existing brands and leverage our scale to unlock value from strategic acquisitions.”

Chief Executive Officer of Yum! Brands David Gibbs (Photo: Scott Eells/Bloomberg)

“As a fast-casual concept with strong unit economics, The Habit Burger Grill is a fantastic addition to the Yum! family and has significant untapped growth potential in the U.S. and internationally. With its delicious burgers and fresh proteins chargrilled over an open flame, The Habit Burger Grill offers consumers a diverse, California-style menu with premium ingredients at a QSR-like value,” he continued.

Established in 1969, The Habit Burger Grill offers customers a variety of made-to-order, chargrilled items, including burgers, hand-filleted and marinated grilled chicken sandwiches, sushi-grade grilled ahi tuna sandwiches, fresh salads, sides, and frozen treats.

Managing a portfolio that includes fast-food chains Taco Bell, Pizza Hut and KFC, Yum! Brands, Inc will now incorporate The Habit Burger Grill into its group of companies.
(Photo: Global Brands Magazine)

The winner of the Best Regional Fast Food in USA Today’s 2019 Best Readers’ Choice Awards, The Habit Burger Grill manages almost 300 company-owned and franchised restaurants across the United States and China.

Gibbs underscored that the acquisition is a “win-win” for Yum! Brands since it “allows us to offer an exciting new investment to our franchisees and to expand an award-winning, trend-forward brand through the power of Yum!’s unmatched scale and strengths in franchising, purchasing and brand-building”.

“[The acquisition of The Habit Burger Grill] allows us to offer an exciting new investment to our franchisees…”

— David Gibbs, chief executive officer, Yum! Brands Inc

Subject to the approval by The Habit Burger Grill’s stockholders, regulators and other customary closing conditions, the transaction should be finalised by the end of second-quarter 2020.

After completing the transaction, The Habit Burger Grill will remain based in Irvine, California. In addition, The Habit Burger Grill’s President and CEO Russell Bendel and Chief Financial Officer Ira Fils will continue to manage the operation while reporting directly to Gibbs.

The Habit Burger Grill’s President and CEO Russell Bendel
(Photo: Orange County Business Journal)

According to Bendel, “Over the past few years, we’ve focused on becoming a total access brand by growing our delivery business, expanding our online ordering and mobile channels and enhancing the in-store experience by introducing drive-thrus, kiosks and technology-centric solutions for operations. We’re proud these and other actions have made The Habit Burger Grill an attractive candidate for a transaction of this kind.”

“On behalf of The Habit Burger Grill board of directors, this transaction represents an exciting new chapter to strengthen and significantly grow The Habit Burger Grill by leveraging Yum! Brands’ global scale, resources and franchising capabilities. We’re confident the agreement delivers immediate value to The Habit Burger Grill shareholders and will greatly benefit our beloved brand, team members, franchisees and loyal guests for many years to come,” Bendel added.

Between fiscal years 2009 and 2018, The Habit Burger Grill grew its company-operated restaurant average unit volumes by nearly 50 per cent, from approximately $1.2 million to $1.9 million, respectively. During that time, the company also grew its total units at a 28.4 per cent compound annual growth rate.