CALABASAS HILLS, Calif.— The Cheesecake Factory, Inc. has entered into a definitive agreement to acquire Fox Restaurant Concepts (FRC) in a transaction valued at $353 million.
The casual-dining company also said it will buy the remaining interest in North Italia from FRC. Since 2016, The Cheesecake Factory has invested $88 million in North Italia and Flower Child, FRC’s better-for-you fast-casual concept, in anticipation of the purchase.
“Since making our initial minority investments in North Italia and Flower Child, we have not only helped fuel the growth of both brands, but also developed a deep relationship with Sam Fox at FRC,” said David M. Overton, chairman and CEO at The Cheesecake Factory, Inc. “We realized the true potential of this relationship as we worked through the integration process for our planned acquisition of North Italia. It became evident that the combination of two of the most experiential and entrepreneurial restaurant companies could drive greater value as one organization.”
The transactions will be completed for $308 million in cash at closing. The cash due at closing will be funded by The Cheesecake Factory’s upsized revolving credit facility and cash on hand, the company said.
The Cheesecake Factory will acquire the remaining interest in North Italia for approximately $130 million in cash, bringing total consideration to $174 million, including $44 million previously invested. It will acquire FRC for approximately $178 million in cash at closing, with $45 million due ratably over the next four years, bringing the total consideration to $267 million, including $44 million already invested in Flower Child. The FRC transaction also includes an earn-out provision based on the financial performance of the FRC brands outside of North Italia and Flower Child.
Following the completion of the transactions, North Italia’s operations will be located in The Cheesecake Factory’s corporate headquarters in Calabasas Hills to help scale the concept nationally.
FRC will operate as a wholly owned subsidiary. Sam Fox, founder and CEO of FRC, will continue to lead the company from its headquarters in Phoenix.
“David Overton and I quickly realized the magic occurring between our organizations while we worked through North Italia’s integration,” Fox said. “With our aligned cultures and philosophies, The Cheesecake Factory is the right partner to embrace our creative spirit, enabling us to innovate concepts, while providing the infrastructure and capital to scale.”
North Italia is an Italian casual-dining restaurant with 20 locations in nine states and Washington, DC. At the close of the transaction, 21 locations are expected to be in operation.
FRC operates 45 restaurants across 7 states and Washington, DC. The company has dozens of restaurant chains and standalone concepts under its umbrella.