Louisville, KY – Yum! Brands, Inc. (NYSE: YUM) today announced the completion of its acquisition of The Habit Restaurants, Inc. (“The Habit Burger Grill”), following the approval by The Habit Burger Grill stockholders. The transaction marks the addition of the first fast-casual concept to Yum! Brands’ portfolio of iconic global restaurant brands.
Yum! Brands acquired all of the issued and outstanding common shares of The Habit Burger Grill for $14 per share in cash or a total of approximately $375 million. Yum! Brands funded the transaction using cash on hand and available borrowing capacity under its credit facilities.
The acquisition of The Habit Burger Grill adds an award-winning fast-casual concept with a loyal fan-base to Yum! Brands, the world’s largest restaurant company in terms of units and parent of KFC, Pizza Hut and Taco Bell. Founded in California in 1969, The Habit Burger Grill offers a flavor-forward variety of made-to-order items uniquely chargrilled over an open flame. Fan favorites include charburgers, hand-filleted and marinated chargrilled chicken sandwiches, sushi-grade chargrilled ahi tuna sandwiches, fresh salads, craveable sides and handmade frozen treats. The Habit Burger Grill, named Best Regional Fast Food in USA Today’s 2019 Best Readers’ Choice Awards, operates nearly 300 company-owned and franchised restaurants across the U.S. and in China.
“Today marks an important milestone in our company’s history as we officially welcome The Habit Burger Grill to the Yum! family,” said David Gibbs, CEO, Yum! Brands. “The Habit Burger Grill is a sweet spot within fast-casual because of its delicious California-inspired menu with premium ingredients at a QSR-like value, strong unit economics and tremendous untapped growth potential in the U.S. and internationally. We couldn’t be more excited about what the future holds for The Habit Burger Grill and believe our acquisition of this trend-forward brand is a ‘win-win-win’ all around. We’ve added another great restaurant brand with a huge runway for growth to our company, our franchisees have a new investment opportunity in an award-winning, fast-casual concept and The Habit Burger Grill can access Yum!’s unmatched scale and strengths in franchising, purchasing and brand-building.”
Yum! Brands estimates minimal impact to non-GAAP earnings per share before special items in 2020, with accretion beginning in 2021 and increasing thereafter.
“This is a historic day for The Habit Burger Grill and we’re extremely proud to join the Yum! family of brands,” said Russ Bendel, CEO, The Habit Burger Grill. “Our amazing team members and franchisees have always been focused on taking great care of our customers by providing a superior in-store experience and incredible food and none of that will change. Being part of Yum! will take The Habit Burger Grill to the next level by leveraging Yum!’s global scale, resources and franchising capabilities to strengthen and significantly grow our beloved brand for many years to come.”
The Habit Burger Grill Highlights
Customer experience of quality, hospitality, convenience and QSR-like value. The Habit Burger Grill is focused on delivering a welcoming customer experience, served up by talented team members and underpinned by outstanding operations capabilities and focus on friendliness. The brand pairs the premium quality and hospitality consumers associate with full-service and fast-casual chains with the strengths in value, convenience and digital access of quick-service restaurants.
Diverse, grill-focused and California-inspired menu. It offers customers a diverse menu featuring a distinctive chargrilled preparation technique to deliver a unique flavor and a broadly appealing variety of burgers, chicken, tuna and steak featured in its sandwiches and salads. All of the menu is cooked and handcrafted to order using fresh and high-quality ingredients.
Modern asset strategy to drive traffic. The Habit Burger Grill believes in its investment in contemporary restaurant design featuring open kitchens, outdoor patios and interiors enhanced with natural light, polished stone and hardwood accents. This warm, relaxed and comfortable environment has contributed to its balanced day part mix of approximately 50 percent lunch and 50 percent dinner.
Expanding digital and delivery capabilities. Over the past couple of years, The Habit Burger Grill has been enhancing the customer experience and offering additional convenience through delivery partnerships and by introducing online ordering, a mobile app, restaurant kiosks, drive-thrus and technology-centric solutions to deliver excellent store operations.
Strong unit economics and growth. The Habit Burger Grill has grown its company-operated restaurant average unit volumes (AUVs) from approximately $1.2 million in fiscal year 2009 to approximately $1.9 million for fiscal year 2019, representing an increase of 53.9%. In the same time period, The Habit Burger Grill has grown from 26 locations in California to 271 locations in 13 states, as well as internationally in China at a compound annual growth rate of 26.4%.
Transaction Details
With today’s announcement, The Habit Burger Grill is a subsidiary of Yum! Brands, Inc. and will continue to be operated as an independent brand.
The Habit Burger Grill will remain based in Irvine, Calif., and will continue to be managed by The Habit Burger Grill’s President and CEO Russell Bendel and Chief Financial Officer Ira Fils. Mr. Bendel reports directly to David Gibbs.
BofA Securities, Inc. acted as financial advisor and Mayer Brown LLP acted as legal advisor to Yum! Brands. Piper Sandler Companies (formerly Piper Jaffray Companies) acted as financial advisor and Ropes & Gray LLP acted as legal advisor to The Habit Burger Grill.
About The Habit Burger Grill
The Habit Burger Grill is a burger-centric, fast-casual restaurant concept that specializes in preparing fresh, made-to-order chargrilled burgers and sandwiches featuring USDA choice tri-tip steak, grilled chicken and sushi-grade tuna cooked over an open flame. In addition, it features fresh made-to-order salads and an appealing selection of sides, shakes and malts. The Habit Burger Grill was recently named Best Regional Fast Food in USA Today’s 2019 Best Readers’ Choice Awards. The first Habit Burger Grill opened in Santa Barbara, California in 1969. The Habit has since grown to nearly 300 restaurants, including locations in 13 states throughout California, Arizona, Utah, New Jersey, Florida, Idaho, Virginia, Nevada, Washington, Maryland, Pennsylvania, North Carolina and South Carolina, as well as seven international locations. More information is available at www.habitburger.com.
About Yum! Brands
Yum! Brands, Inc., based in Louisville, Kentucky, has over 50,000 restaurants in more than 150 countries and territories primarily operating the company’s brands – KFC, Pizza Hut, and Taco Bell – global leaders of the global leaders of the chicken, pizza, and Mexican-style food categories. The Company’s family of brands also includes The Habit Burger Grill, a fast-casual restaurant concept specializing in made-to-order chargrilled burgers, sandwiches and more. Worldwide, the Yum! Brands system opens over nine new restaurants per day on average, making it a leader in global retail development. In 2019, Yum! Brands was named to the Dow Jones Sustainability North America Index and ranked among the top 100 Best Corporate Citizens by Corporate Responsibility Magazine.
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