Hello!

Today we’re covering…

• The billionaire circling Wendy's

• The Salad and Go real estate fight gets a second bidder

• And Pumpkin Cheesecake Pancake Tacos

Read on…

3 Numbers

24%

Combined stake in Wendy's held by Nelson Peltz and his firm Trian, which, the Financial Times reported this week, is assembling a consortium to take Wendy’s private, with a bid possible within weeks. Peltz’s rumored partners: Abu Dhabi-based (and Bugatti backer) BlueFive Capital and the Flynn Group. Flynn — the world’s largest franchisee — owns over 300 Wendy’s units and would be helping to buy its own franchisor.

9%

Cava's same-store sales growth in Q2, with 5.3 points of it from actual guest traffic — this, despite the chain seeing a short-term hit from guests avoiding salad greens this summer. (Cava itself wasn’t affected by the cyclospora outbreak.) Cava’s average unit volumes are now $3.1 million, up from $2.9 million last year.

500

Worldwide units of the chain Bonchon, which was sold last week. It’s a somewhat complicated deal: Thailand’s Minor Food will take all units outside the Americas for a net $50 million, while Toronto’s Serruya Private Equity (which owns stakes in STK, Pinkberry, and Swensen’s) will control the franchises located in the Americas.

The Big Story

In last week’s issue, I told you that Dutch Bros agreed to pay $105 million for the leases and equipment at up to 65 shuttered Salad and Go drive-thrus. This week, in a Texas bankruptcy court, we found out who else wanted them… the other fast-growing drive-thru coffee chain.

7 Brew, now around 777 stands strong, told the court it submitted a competing bid, and its lawyers argued the process was run to shut them out.

7 Brew's version goes like this: It sent Salad and Go a letter of intent the same day Dutch Bros did, kept raising its offer in both dollars and number of leases, and volunteered to be the opening bidder in a real auction. Instead, it says, Salad and Go went dark on 7 Brew for the week before filing, then walked into court with a Dutch Bros deal built so nobody could top it.

Salad and Go's own filing says it evaluated 16 potential buyers, narrowed to three, visited the top two in July, and that both Dutch Bros and 7 Brew asked for a direct sale with exclusivity rather than an auction. Salad and Go's remaining ~100 leases will go to a competitive process, and the debtor says "many interested parties" have already surfaced. A judge takes up the competing bids in September, so we’ll see what happens.

Anyway, this all felt unusual to me, and I went down a rabbit hole researching whether a shuttered restaurant chain's real estate had ever been this in demand.

The closest precedent I can find is a much bigger version of a similar story: When Boston Market collapsed into bankruptcy in 1998, McDonald's bought the whole chain in 2000 for $173.5 million. McDonald's said outright that it would convert sites into more McDonald's and into a promising little chain it owned at the time (Chipotle). The deal arguably worked — one analyst said that McDonald’s had gotten “a lot of real estate at a little price.”

Fights like this are routine when a big-box retailer liquidates, and Sports Authority's and Toys R Us's shuttered stores both drew competing bids from rivals. What's relatively rare is seeing it in restaurants, over buildings this tiny.

Which means decent drive-thru locations are at such a premium that two coffee chains with hundreds of planned openings each are willing to litigate over 65 of them.

Elsewhere In the Headlines

• First Watch continues to be an underrated growth story. Its numbers last quarter: 18 new stores, 3.4% same-store sales growth, company revenue up 15.2%.

• Domino’s is set to release “The Domino,” a Detroit style rectangular pie made for solo orders, on Aug. 31. The company plans to put some marketing heft behind the new product, which required franchisees to purchase special pans to produce it.

• The Chili’s streak now stands at 21 straight quarters of same-store sales growth after the company reported a 5.6% increase last quarter. Three-year cumulative same-store sales are up a preposterous 50%.

• Smoothie King is privately held, so we typically don’t get a peek at their numbers. Nevertheless, they’d (understandably) like you to know that they hit a 9% same-store sales increase in July, thanks to a successful launch of their new flatbread line.

• On August 24, Chick-fil-A will launch its first ever non-biscuit breakfast sandwich, a Chicken and Waffles build, nationwide. (The McGriddle walked so the Chicken and Waffles Sandwich could run…)

• On the forthcoming IHOP fall seasonal menu: Pumpkin Cheesecake Pancake Tacos. You’re not having a stroke, and you read those words in their correct order.

• Elsewhere in new menu items: Culver's launched a Fried Pickle Pub Burger. And Arby's brought back Steak Nuggets, now in a bowl with potatoes.

Name That Chain!

You’ve got three clues to name this issue’s chain:

• The founder emigrated from Kastoria, Greece in 1912, cooked for a railroad crew to earn his wife's passage, and in 1949, at age 70, opened a diner with three of his sons at the top of a steep hill in a Midwest city.

• Ordering at his restaurant meant adopting its own dialect: a 3-Way, a 4-Way, a 5-Way, or a Cheese Coney.

• The name came from what he could see out the front window of that first shop, which has since been torn down. Today it's the official chili of several professional sports teams, and sits in more than 130 restaurants across Kentucky, Ohio, Indiana and Florida.

Find the answer at the bottom of the email…

Power Moves

Here are some notable recent C-suite moves:

• 25-year McDonald’s vet Patrick Gerber is the new Chief Restaurant Officer of McDonald’s USA.

• Panera has a new CMO, Andrew Rebhun, formerly of Cava.

Thanks for reading! I’ll see you again next week.

NAME THAT CHAIN ANSWER: Skyline Chili