The deal comes after a controversial bankruptcy process.
BBQ Holdings isn't done increasing the size and diversity of its portfolio.
The Famous Dave's parent was recently designated the winner of a bankruptcy auction for Fresh Acquisitions, owner of six-unit steakhouse company, Tahoe Joe's. BBQ Holdings will pay $5.2 million, including $4.2 million in cash plus the assumption of up to $1 million in liabilities. The transaction also includes the intellectual property of closed buffet brands HomeTown Buffet, Ryan's, Fire Mountain, Old Country Buffet, and Furr's Fresh Buffet, but BBQ Holdings has no immediate plans to reopen those concepts.
BBQ Holdings indicated that some of Tahoe Joe's items may show up in other menus, like the steakhouse's pellet broiled steaks and chops being added to Famous Dave's.
"We are thrilled to welcome Tahoe Joe's into the BBQ Holdings Family. This well-loved brand will fold seamlessly into our portfolio, and we can't wait to start working with the fantastic people who have made Tahoe Joe's what it is today, and to get the brand on a rejuvenated path to growth," BBQ Holdings CEO Jeff Crivello said in a statement.
Fresh declared bankruptcy in April after severe disruptions from the COVID pandemic, with most of its stores closing in 2020 and never reopening. Within weeks of the bankruptcy filing, the company rejected all store leases except for the six Tahoe Joe's restaurants.
In May, VitaNova Brands was installed as the stalking horse bidder, with a credit bid of $3.5 million. After Fresh received no other qualified bid in late July, it canceled the auction and designated VitaNova as the successful bidder, but not without controversy surrounding VitaNova's relationship with Fresh.
In addition to giving DIP financing to Fresh, VitaNova also provided "certain administrative functions, such as accounting, cash management, tax, payroll, HR, IT, marketing, legal and insurance." Court documents also state VitaNova is "owned and controlled by certain individuals who control the Debtors’ ultimate owners and sit on the Debtors’ respective boards.”
Creditors questioned the "extraordinary conflicts of interest" and cite in court documents that "it has been no secret that these bankruptcy cases were designated to benefit the insiders." Amid these concerns, the bankruptcy judge denied the deal.
After weeks of additional sales marketing, Serene Investment Management was labeled as the new stalking horse bidder, with a purchase price of $4.3 million, but BBQ Holdings outbid the company with its $5.2 million bid.
The buffet conglomerate once had 650 restaurants spanning across the U.S. In between then and now, the concepts have declared bankruptcy multiple times.
BBQ Holdings' victory comes about two months after finalizing its $13.5 million purchase of Village Inn and Bakers Square. Prior to that acquisition, the company bought Granite City Food and Brewery and Real Urban Barbecue in 2020. As of September 20, BBQ Holdings operated 296 locations across six brands, including 84 company-run stores and 213 franchised locations. The company also operates eight corporate Famous Dave's ghost kitchens inside Granite City, and 19 franchised ghost kitchens out of other restaurants.
"BBQ Holdings is on a steep trajectory," Crivello said. "We continue to execute our three pillars of growth. First, filling latent capacity in our current restaurants with ghost kitchens, virtual brands, and dual concepts. Second, organic new restaurant units, and third, accretive and strategic M&A."