Famous Dave’s parent BBQ Holdings announced Friday it will purchase Village Inn and Bakers Square for $13.5 million, two months after hinting another acquisition was imminent.
The package includes 135 Village Inn restaurants—21 company-owned and 114 franchised—and 13 company-owned Bakers Square locations. The deal is expected to close by the end of July.
“We believe the Village Inn and Bakers Square concepts are a great complement to our growing portfolio of restaurants,” said BBQ Holdings CEO Jeff Crivello in a statement. “Adding them to our family of brands will only strengthen our company as a whole. We can’t wait to start working with the wonderful people who have made Village Inn and Bakers Square what they are today, and we’re excited to put these two brands on a new and reinvigorated growth path.”
The move marks BBQ Holdings’ third transaction in little over a year. The M&A journey started in February 2020 when BBQ Holdings agreed to acquire Granite City Food and Brewery out of bankruptcy—the company’s first non-barbecue brand. Soon after, BBQ Holdings purchased a Real Urban Barbecue restaurant based in Vernon Hills, Illinois.
In April, the company said in an SEC filing that it was exploring more acquisition opportunities and that it had a “vision to build a diverse portfolio of established food and beverage concepts.” The first item on the company’s wish list was obtaining legacy brands, and Village Inn and Bakers Square fit that description perfectly.
Village Inn was founded in 1958 and is known for its “made-from-scratch buttermilk pancakes, eggs cooked any-style, and a pot of hot coffee on every table.” The brand is based in the Rocky Mountain region, Midwest, Arizona, Florida, and other states. Bakers Square started in the early 1970s as an independent restaurant in Des Moines, Iowa, serving soups, sandwiches, and pies. The chain, which resides in the upper Midwest, has placed first in the American Pie Council National Pie Championships more than 300 times.
“Over the last several years, we’ve focused on creating a foundation for these concepts to have sustainable long-term health and value-creation,” said Craig Barber, CEO of Village Inn and Bakers Square parent VIBSQ, LLC, in a statement. “We have an amazing group of franchisees whose operational execution is a core strength for the brand. We are excited to have reached an agreement with BBQ Holdings with confidence in their leadership for the future of these great brands. We wish them, our operational teams and the franchisees the very best in the years ahead.”
However, the two brands haven’t been without their struggles. The companies’ parent American Blue Ribbon Holdings declared bankruptcy in January. The two brands ended 2019 with 130 company-owned stores, but 33 underperforming units closed as American Blue Ribbon entered bankruptcy, leaving them with 97. Amid the Chapter 11 process, the company-run footprint decreased even further. Twenty-eight more locations permanently shut down and 34 stores were refranchised, putting the final corporate tally at 35. The brands emerged from bankruptcy in September 2020.
When the bankruptcy was filed, American Blue Ribbon attributed the move to higher wage rates, unfavorable trade locations, high rent, increased competition in the family-dining segment, and emphasis of off-premises. American Blue Ribbon sustained operating losses of $11 million in 2018 and $7 million in 2019.
The addition of the two brands may fit into plans BBQ Holdings has for Granite City. The chain’s kitchens were meant for roughly $6 million in AUV, as opposed to the current $3.8 million to $3.9 million. To resolve this, BBQ Holdings is investigating a dual-branded restaurant with a high-end breakfast concept that also sells alcohol. The breakfast restaurant would be open from 6 a.m. to 2 p.m. while Granite City would open from 2 p.m. to 11 p.m. The goal would be to open 10 of these restaurants. BBQ Holdings estimated such a deal could generate $1.5 million in additional revenue with 25 percent flow through and $375,000 in additional EBITDA per location.
When the transaction closes, BBQ Holdings will have six brands with more than 280 brick-and-mortar locations—Famous Dave’s, Granite City, Real Urban Barbecue, Clark Crew BBQ, Village Inn, and Bakers Square.