Along with a group of selected franchisees, Wendy's makes a bid to purchase nearly 400 locations out of bankruptcy.
According to reports from Eat This, Wendy's is looking to buy almost 400 of its restaurants that are operated by franchisee NPC International. NPC International currently operates over 1,200 Pizza Hut stores and 385 Wendy's stores. The said outlets are the ones Wendy's wants to buy for it to remain with them.
In July of this year, NPC announced that they filed bankruptcy due to years of weak sales and massive debt. According to Restaurant Business Online, NPC is one of the largest restaurant-operating companies in America.
It operates multiple Pizza Hut and Wendy's stores, which account for about 16% of the U.S. fast-food chain system. However, it is also reported that the company has around $903 million in debt.
NPC claims that they have already reached out to lenders in order to strike a deal and come up with a restructuring framework. NPC's lenders want the sale process to go as quickly as possible. They said they are looking for the most significant returns to recover as much from the loans.
In addition to that, they also revealed that they are planning to sell their Wendy's stores, which performed well in the recent years. NPC is considering multiple options for the sale process, including selling everything to one buyer or selling it off in pieces.
Currently, the Wendy's stores have a price tag of $400 million.
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However, this Thursday, Wendy's decided to step in and submit their bid for the stores operated by a bankrupt franchisee, NPC International.
This move indicates that Wendy's is willing to take specific measures to ensure that the stores are sold to the franchisees it prefers. The company fears many of these locations may not remain Wendy's restaurants once they are sold.
In addition, they also said that they are not planning to hold unto all of the said locations. They revealed that a few existing and new franchisees would be the restaurants' ultimate purchasers, with only one or two to be acquired by the company.
To make things sound simple, Wendy's is not doing this to accumulate power but to make sure that the restaurants' currently in existence will remain as such. Wendy's wants to keep its ownership level at just around 5% of the chain's 5,800 U.S. stores.
Meanwhile, Flynn Restaurant Group turns out to be the "stalking horse" bidder for the company putting in an $816 million bid.
Other bidders would need to outbid the said amount and pay Flynn a breakup fee of at least $10.5 million. Pizza Hut already made an agreement with Flynn to operate 900 of its units.
On the other hand, Wendy's opposed and claimed that there were disagreements over Flynn's potential capital spending and franchisee's operation of Panera Bread and Arby's.
Wendy's stated that they want Flynn to sell those concepts since both of those brands are competitors.
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