NPC International, Flynn Restaurant Group Finalize Acquisition | Franchise Mergers and Acquisitions

The massive sales process for NPC International’s 1,300+ restaurants is complete.

NPC requested Bankruptcy protection in July 2020, citing COVID-19 as composing for ongoing issues. Since then, it has been a big question what would happen to all of the restaurants belonging to the second largest franchisee group, the Times Restaurant 200 franchise, our list of top restaurant franchisees.

During the auction process, the Flynn Restaurant Group – already the largest franchisee group on the list –Bid for the entire company as a “stalking horse” bidder. The lower bid limit was $ 816 million. This process was soon canceled and after much negotiation a deal appears to have been reached.

The Flynn Restaurant Group will take over all of the 925+ Pizza Hut restaurants, compared to the 1,229 NPC reported in late 2019. Flynn will also acquire nearly 200 Wendy locations in Salt Lake City, Central Maryland and two Baltimore-area markets. In total, Flynn paid $ 522.5 million for the restaurants. That’s roughly $ 475,000 per restaurant, including Pizza Hut and Wendy’s. And there are other fees. Flynn will also pay for cash, inventory, and $ 8 million in prearranged construction costs for the many NPC restaurants under construction at the restaurant level. NPC acquired 140 Wendy’s restaurants in 2017 under an aggressive update agreement.

If the deal is approved, Flynn will become the largest operator of Pizza Hut, Applebee’s, and Arby’s. The company also operates more than 130 Panera locations and more than 260 Taco Bell locations.

Jon Weber, CEO and President of the Pizza Hut Division of NPC International, said this was a positive result for the operations of Pizza Hut.

“We are confident that NPC’s Pizza Hut restaurants are in very good hands as part of the Flynn Restaurant Group,” said Weber. “We have built great teams in our Pizza Hut restaurants across the country. I am very proud of how our organization came together in 2020 and how we continue to strive for outstanding quality and excellent service. “

A major point of contention during the deal – and what stalled it and got it into mediation – was the potential conflict of interest at Flynn, who runs Arby and Wendy’s restaurants. Wendy reportedly saw the brand as direct competition. It was clear they agreed, but that was the likely cause of the split of the NPC restaurants between Flynn and a group of “pre-qualified franchisees,” according to legal records.

The other 194 restaurants involved in the bankruptcy proceedings were divided among this group. The Delight Restaurant Group has 54 Wendy’s in the Raleigh, North Carolina market. Legacy Restaurant Group will own 35 Wendy’s restaurants in Kansas City Market and Yellow Cab Holdings will own 54 restaurants in Pennsylvania Market. The Schmidt Family Restaurant Group and the Superior Restaurant Group will each take over half of the 51 restaurants in Greensboro Market. In total, the group paid $ 248,250,000 for the 194 locations, likely with fees similar to Flynn’s. That equates to a cost of $ 1.2 million per Wendy location.

“This is an excellent result for Wendy’s Restaurants from NPC and our team,” said Carl Hauch, CEO and President of Wendy’s Division, NPC International. “We are very pleased that our restaurants belong to the established, high-performing restaurant franchise groups. We thank Judge Isgur for his guidance during the mediation process and Wendy’s, Flynn, the Wendy’s franchisees, and our lenders who worked diligently to achieve this result. “

Greg Flynn, founder and CEO of the San Francisco-based Flynn Restaurant Group, said it was another big step in what he calls it State and federal model of running the massive restaurant organization.

“Flynn Restaurant Group has built our business for over 20 years by focusing on managing superior operations with great teams of people on world-class restaurant concepts,” said Flynn. “The Pizza Hut and Wendy restaurants that we acquired from NPC are a perfect fit for this strategy and we are confident that our new team members will fit right into the Flynn Restaurant Group.”

A final sales hearing will be held on January 15th and objections can be raised until January 11th. However, given today’s contract, it is unlikely that there will be any significant changes. The deals are expected to close at the end of the second quarter of 2021. The buyers of both transactions have agreed to offer employment to all restaurant, field service and “essentially all other” non-field service employees of NPC International.

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