Restaurant software company PAR Technology announced Thursday that it acquired Punchh, a loyalty and engagement platform, for roughly $500 million.
The transaction was made possible by a combination of equity and debt. Equity funding for the transaction was led by Ron Shaich’s Act III Holdings, which received $160 million worth of PAR stock. Shaich, the founder of Panera, is no stranger when it comes to significant investments. After selling the chain to JAB Holding Company in 2017 for $7.5 billion, Saich’s Act III financed Cava’s $300 million purchase of Zoe’s Kitchen. In May 2020, BJ’s Restaurants revealed it received a $70 million investment from Act III.
Another $160 million of stock went to funds and accounts advised by T. Rowe Price Associates. The remaining $180 million was captured from a senior secured term loan under a credit agreement, with Owl Rock First Lien Master Fund as the administrative and collateral agent.
Shaich believes PAR’s vision will help more restaurants compete in what he called “the digital arms race.”
“We are thrilled to join this journey with PAR and Punchh,” Shaich said in a statement. “As a founder and long-time CEO of a large restaurant company, I understand first-hand the struggles of trying to power a large enterprise by gluing together disparate technologies from multiple vendors which results in silos of data, increased management costs and barriers to agile innovation. However, those restaurant brands that can create a differentiated guest experience, aided by seamless omnichannel technology and a superior understanding of their guests’ preferences and behaviors, will be best positioned to win in the ever increasingly competitive restaurant marketplace.”
As part of the move, Keith Pascal, an Act III partner, will join PAR’s board of directors. Shaich will take a board observer seat.
More than 100,000 restaurants use PAR’s POS hardware and SaaS software, including Denny’s and Taco Bell, Pizza Hut, and KFC parent Yum! Brands. Punchh’s services are used by more than 200 global brands, including Yum! and Focus Brands, the parent of Moe’s Southwest Grill, Jamba, and Cinnabon.
PAR said the purchase of Punchh will transform it into “a unified commerce cloud platform for enterprise restaurants,” and will make it a leader in POS, back office, payment, and guest engagement solutions.
“Today there is a conflict between restaurants and technology,” PAR CEO Savneet Singh said in a statement. “The quantity of new software applications is making it difficult for restaurants to navigate complex integration networks and taking away from focusing on their guests. Meanwhile, online marketplaces are becoming intermediaries between restaurants and their guests. With the Punchh acquisition, we are building a platform that enables restaurants to scale quickly, own their path to innovation, and take back their guest relationship.”
“This eliminates the need for juggling disjointed vendors, developing cumbersome point-to-point integrations, and relying on 3rd party dependencies,” he continued. “At the same time, Punchh advances our ability to provide customers with an end-to-end solution, from guest-to-kitchen, through one unified data source.”
Goldman Sachs served as financial advisor to PAR, and Gibson, Dunn & Crutcher served as legal counsel. J.P. Morgan Securities served as Punchh’s exclusive financial advisor, and Fenwick & West worked as the company’s legal counsel.
“With its Brink POS, PAR has been a Punchh partner for many years,” said Punchh cofounder and president, Shyam Rao, in a statement. “We’ve gotten to know them while jointly servicing customers and have always been impressed with their focus on their customer’s success. PAR’s point-of-sale and back-office solutions combined with our loyalty and engagement platform give customers an end-to-end solution for top-line growth, profitable guest relationships and operational efficiencies. We’re excited to join the PAR team and further our offerings to the hospitality industry.”