- The parent company of Arby’s has agreed to acquire Buffalo Wild Wings for $US2.9 billion.
- When Roark Capital acquired Arby’s in 2011, the chain was losing millions of dollars a year.
- Under CEO Paul Brown, Arby’s has become one of the most successful chain restaurants in the industry, with $US3.7 billion in sales last year.
- Brown’s new task is to manage a similar turnaround at the struggling Buffalo Wild Wings.
Arby’s has achieved a breathtaking comeback in recent years. Now, its CEO’s next mission is saving Buffalo Wild Wings.
Roark Capital, the parent company of Arby’s and Cinnabon, on Tuesday announced that it had agreed to buy Buffalo Wild Wings for about $US2.9 billion.
According to the companies, Buffalo Wild Wings will operate as a privately held subsidiary of Arby’s Restaurant Group. The CEO of Arby’s, Paul Brown, will serve as the CEO of the parent company.
The news comes after a challenging period for the chicken chain. Buffalo Wild Wings is one of many casual-dining chains that have struggled to attract diners as millennial tastes have evolved away from sit-down restaurants.
In August 2016, the activist investor Marcato Capital Management published an open letter accusing Buffalo Wild Wings’ management of mismanaging the company. Marcato and Buffalo Wild Wings publicly sparred for the next year, as the chain’s sales continued to slump. Finally, in June, CEO Sally Smith announced she was leaving the company after Marcato gained control of the company’s board.
Roark is acquiring a company deeply in need of a comeback. Fortunately for Buffalo Wild Wings, the private-equity firm has a blueprint for success: Arby’s.
In 2011, Arby’s was struggling to stay afloat, posting a $US350 million loss the prior year. The brand – known primarily for its roast-beef sandwiches – had simply lost its relevance and was scrambling to attract customers.
In July of that year, Wendy’s/Arby’s Group split Arby’s off and sold a majority stake to Roark.
Under Roark’s ownership, Arby’s moved to attempt a basic reset of the brand. The chain closed underperforming locations and began developing new menu items.
The turnaround cranked into high gear in 2013, when the chain hired a wave of new executives including Brown, an outsider with minimal restaurant experience. Under Brown, Arby’s took risks designed to make Arby’s stand out and grab headlines.
“We had to one, come up with a way of talking about ourselves in a voice that actually stood out, but we also had to be more creative about all the channels that you could use to get the message out,” Brown told Business Insider this past July.
Arby’s debuted the “We Have the Meats” campaign in 2014. Its social-media manager was given more freedom that year after a tweet comparing Pharrell Williams’ hat at the Grammy Awards to Arby’s logo went viral. New menu items became more over-the-top, with offerings like the venison sandwich. After interviewing employees, Arby’s began redesigning kitchens as part of an aggressive remodeling effort.
The changes worked. The chain reached $US3.7 billion in sales last year, with $US1.1 million in sales per store on average in the US – up 20% from 2013. Arby’s has achieved six years of consecutive quarterly sales growth.
Now the sandwich chain is coming for Buffalo Wild Wings.
“Buffalo Wild Wings is one of the most distinctive and successful entertainment and casual dining restaurant companies in America,” Brown said in a statement on Tuesday.
“We are excited to welcome a brand with such a rich heritage, led by an exceptionally talented team,” Brown continued. “We look forward to leveraging the combined strengths of both organisations into a truly differentiated and transformative multi-brand restaurant company.”