LOUISVILLE, Ky. – Yum! Brands Inc. entered into a definitive agreement to acquire all of the issued and outstanding shares of The Habit Burger Grill for $14 per share in cash for a total of approximately $375 million. The company expects to close the deal by the second quarter of 2020.
Yum! expects to fund the transaction using cash on hand and borrowing under the company’s credit facilities. The deal is subject to approval by The Habit Burger Grill stockholders, regulatory approval and other customary closing conditions. The Habit Burger Grill will remain based in Irvine, California, and will continue to be managed by Russell Bendel, The Habit Burger Grill’s president and CEO, and Ira Fils, chief financial officer.
“As a fast-casual concept with strong unit economics, The Habit Burger Grill is a fantastic addition to the Yum! family and has significant untapped growth potential in the US and internationally,” said David Gibbs, CEO of Yum! Brands. “With its delicious burgers and fresh proteins chargrilled over an open flame, The Habit Burger Grill offers consumers a diverse, California-style menu with premium ingredients at a QSR-like value.
“The transaction is a win-win because it allows us to offer an exciting new investment to our franchisees and to expand an award-winning, trend-forward brand through the power of Yum!’s unmatched scale and strengths in franchising, purchasing and brand-building,” he added.
The Habit Burger Grill offers custom order items that are chargrilled over an open flame. Popular items include charburgers, hand-filleted and marinated chargrilled chicken sandwiches, sushi-grade chargrilled ahi tuna sandwiches, fresh salads, sides and handmade frozen treats. The Habit Burger Grill was founded in 1969.
“Over the past few years, we’ve focused on becoming a total access brand by growing our delivery business, expanding our online ordering and mobile channels and enhancing the in-store experience by introducing drive-thrus, kiosks and technology-centric solutions for operations,” Bendel said. “We’re proud these and other actions have made The Habit Burger Grill an attractive candidate for a transaction of this kind.
“On behalf of The Habit Burger Grill board of directors, this transaction represents an exciting new chapter to strengthen and significantly grow The Habit Burger Grill by leveraging Yum! Brands’ global scale, resources and franchising capabilities,” he continued. “We’re confident the agreement delivers immediate value to The Habit Burger Grill shareholders and will greatly benefit our beloved brand, team members, franchisees and loyal guests for many years to come.”
The Habit Burger Grill grew company-operated restaurant average unit volumes (AUVs) by 49.9 percent, from approximately $1.2 million to $1.9 million, respectively, from fiscal year 2009 to 2018. In the same time period, The Habit Burger Grill grew its total units at a 28.4 percent compound annual growth rate.
The restaurant concept features open kitchens, outdoor patios and a day part mix of approximately 50 percent lunch and 50 percent dinner. Efforts to expand digital and delivery capabilities include delivery partnerships, online ordering and a mobile app.