Burger Chain Completes Refranchising Deals to Reduce Debt and Improve Flexibility
- Red Robin has fully closed the refranchising deals for 108 restaurants from coast to coast. The total price tag came to $89.4 million.
- Three multi-unit franchisees will operate the locations, which will retain the Red Robin branding.
- The sale of eight additional Red Robin restaurants is pending. Those restaurants will sell for $6.6 million.
Red Robin Gourmet Burgers Inc. on Tuesday announced it had completed $89.4 million in refranchising deals for 108 corporate-owned restaurants. The sale of eight more Red Robin casual dining restaurants is expected to close within months for an additional $6.6 million, Yahoo reported.
The brand has been selling corporate-owned locations to pay down its debt. In a news release, Red Robin leadership stated that the new owners will keep the franchised restaurants open under the Red Robin brand.
Red Robin resides in the competitive U.S. burger market, which is valued at more than $200 billion, according to the market research company Ibis World. While many restaurants are struggling amid rising costs because of tariffs and inflation, Red Robin has recently posted an upswing in revenue, according to FSR Magazine, a trade publication for restaurants. Although Red Robin’s traffic declined 0.2%, FSR Magazine reported that the chain’s same-store sales climbed 1.3% in the second quarter of this year.
Red Robin’s New Franchisees
All of the new franchisees have strong experience in multi-unit restaurant operations.
Op Burgers LLC acquired 69 restaurants in Kentucky, Indiana, Maryland, Ohio, North Carolina, Pennsylvania, South Carolina and Virginia for $62.5 million. The sale of 61 of these restaurants, for $55.9 million, is fully complete. The sale of the eight remaining restaurants is scheduled to close by the end of the fiscal year, pending the transfer of liquor licenses; the price tag for those is $6.6 million.
The other 47 Red Robin restaurants are located in the Pacific Northwest. Evergreen Dining LLC acquired 30 restaurants based in Washington State and western Idaho for $23.5 million. Kuber Oregon LLC and Kuber Washington LLC acquired 17 restaurants based in Oregon and Washington for $10 million.
Red Robin CEO’s Statement
Red Robin President and CEO Dave Pace said in the news release that the completion of the refranchising agreements will strengthen Red Robin’s balance sheet and set up the company “for sustainable, long-term growth.”
Pace also praised the franchisees, saying, “Each of these seasoned operators shares our hospitality-first mindset and brings the resources needed to accelerate growth across these markets, while continuing to deliver an exceptional guest experience. Importantly, these transactions will advance our efforts to refinance our existing debt and increase our financial flexibility. We are confident these operators will be strong partners who can help each location unlock its full potential for the benefit of our guests, team members and investors.”
Founded in 1969, Red Robin Gourmet Burgers Inc. has 500-plus locations in the United States and Canada. Its headquarters are in the Denver area.
About the New Franchise Operators
Based on information in the news release, here’s an overview of the new franchisees:
- Op Burgers is part of the portfolio of Alexandrite Management, a private investment firm focused on assisting the growth of enduring, profitable companies. Op Burgers’ management is experienced in operating franchised restaurants.
- Evergreen Dining was created for the purpose of acquiring and running the 30 Red Robin restaurants in Washington and western Idaho. During a period approaching 30 years, its principals have operated more than 100 restaurants across multiple national brands.
- Aman Sharma, a veteran franchise operator in hospitality and food services, leads the Kuber team. Sharma has experience in multi-unit, multi-brand operations and scaling.
