I recently attended the annual Franchise Times Finance and Growth Conference in Las Vegas. In addition to hearing dozens of emerging and established brands pitch their systems, one of the highlights of the Conference is certainly the Deal Makers Gala Awards Luncheon. This is where the Franchise Times recognizes those deals which “drive the capital the help build franchise empires.” The luncheon kicked off with a very insightful panel composed of three award winners:
- Greg Flynn, CEO of Flynn Restaurant Group discussing the acquisition of U.S Beef and its 358 Arby’s units;
- Heather Elrod, CEO, who detailed the sale of Amazing Lash to WellBiz Brands; and
- David Pipes, CFO of Inspire Brands, who closed two take-private deals acquiring Buffalo Wild Wings and Sonic.
Greg Flynn said the Flynn Restaurant Group’s success is looking for brands that are not frothy but solid. He acknowledges that Arby’s went through some hard times. However, he is convinced that when you have a brand that well-known, it doesn’t take more than some improved management to turn things around. In his opinion, buying brands at their peak, paying historically high multiples and ending up with a high cost basis just doesn’t make sense. Buying up units of solid and well-known brands, like Arby’s and other concepts like Applebee’s, at low prices, is a much better bargain and long-term bet. The price point coupled with the location of the units, business friendly Oklahoma and the Midwest where people love Arby’s, sealed the deal.
Heather Elrod spoke about the challenges in selling a service brand unknown to many in the male dominated private equity firms. She focused on the white space available and the room for substantial growth in the eyelash extension market as over 91% of women in the markets where the units were located hadn’t tried the service. As someone with over 25 years experience in the wellness and beauty industry, Heather was skeptical of a service she thought only catered to a younger market. However, she was quickly sold when she realized there is a huge market to 40-50 year olds who use lash extensions as an anti-aging technique.
David Pipers discussed how there are many brands out there that need certain services and investments in technology that are costly but of ubiquitous need among various brands. Although Buffalo Wild Wings and Sonic were different in concept, David could leverage those important services across the systems in Inspire Brands portfolio. He also spoke frankly about the hurdles facing the Buffalo Wild Wings brand upon acquisition, including its attempt to shift from a sports bar concept to a casual dining concept, activist investors and a retiring CEO without any COO or succession plan in place. Notwithstanding those issues, David believes the loyalty among the Buffalo Wild Wings clientele are unparalleled and was optimistic about the system long-term.
It was a lively discussion with interesting takeaways and a great start to the Gala Awards Luncheon.