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Back in 2011, Applebee’s franchisee Greg Flynn set a goal to diversify his restaurant company’s portfolio, a strategic move made after casual dining was hit hard by two recessions.
The CEO and founder of Flynn Restaurant Group, who is also the largest Applebee’s franchisee with 444 locations, has since amassed a multi-unit company of 1,223 restaurants that includes some of the industry’s most popular fast food and fast-casual brands: Taco Bell (280), Arby’s (367) and Panera Bread (132). By many accounts, including Flynn’s own, he is the largest franchise operator in the US.
And his empire is about to get bigger.
Last week Flynn cut a deal to nearly double the size of his San Francisco-based company to nearly 2,400 restaurants by adding two fast-food categories that have eluded him: pizza and burgers.
“They’re the two largest segments in the industry, and we weren’t in either of them,” Flynn told Insider during a recent interview.
Flynn bought more than 1,100 Pizza Hut and Wendy’s restaurants from bankrupt operator NPC International. Wendy’s Co. gained about 200 Wendy’s restaurants from NPC in the twin deal, valued at $801 million. Flynn will pay $552.6 million.
The acquisition expands Flynn’s relationship with Taco Bell parent Yum Brands, also the owner of Pizza Hut, and cements his position as one of the most successful operators of multiple restaurant franchises in the business. Before the deal, Flynn’s four brands generated annual sales of $2.3 billion.
Flynn’s restaurant group’s annual sales will jump to roughly $3.5 billion with the addition of Pizza Hut and Wendy’s. To put that in perspective, Chipotle Mexican Grill generated $5.6 billion in revenue in 2019 with roughly 2,600 restaurants.
“I think Flynn Restaurant Group is one of the best operators in the restaurant industry,” analyst Mark Kalinowski, president and CEO of Kalinowski Equity Research, told Insider.
Read more: Flynn Restaurant Group to buy more than 1,100 Pizza Hut and Wendy’s restaurants in what’s expected to be one of many mergers and acquisitions in the chain restaurant space this year
During our interview, Flynn talked about his growing fast food empire, 2021 trends, and his about-face when it comes to third-party delivery. Here’s what he had to say:
Pandemic weeded out rival bidders
Flynn has been an Applebee’s franchise since 1999. But in 2011, he began scouting “top tier” quick-service chains in different markets.
When you “slice and dice it that way,” Flynn said that left him very few brands to go after.
In 2012, he added Taco Bell, followed by Panera Bread in 2014 and Arby’s in 2018.
The Arby’s transaction, which involved the purchase of 368 restaurants from US Beef, was “the largest franchise transaction ever,” Flynn said. That is, before the NPC deal.
The deal laid the groundwork for his most ambitious purchase to date. Scale, he said, is crucial to his game plan.
“For it to matter, it needs to be at scale,” he said.
Having “a voice in the system” means he can be a positive contributor “with a seat at the table,” he added.
By being a larger operator, Flynn said he has “a seat at the table” among …read more
Source:: Business Insider