Quick service franchises like Pacific Bells have been part of recent deal making in the restaurant business space. These snack food businesses performed really well during the pandemic. They have become well-capitalized thus are attractive acquisition targets. The recent acquisition of a Taco Bell franchisee by Orangewood is not their first purchase.
The investors have already bought $700 million of assets working with companies across multiple verticals. They have bought 24 Taco Bell units in 2018 using their ABTB arm while purchasing 8 additional restaurants in the Louisville market in 2019. This new buy of Orangewood shows its confidence in Taco Bell brand.
Taco Bell brand’s Q3 system sales grew to 8%, driven by 4% unit growth and 5% same-store sales growth, which has gotten them this offer. Digital sales happened rapidly with the brand opening more Go Mobile locations to accelerate the sales. There are more such dual drive-thru models in the development pipeline.
The franchise’s are earning record profits at the unit level. It is being reported that the noted franchisees have remained almost insulated from current labor and commodity pressures that are affecting the industry. The franchisees are not immune to the market pressures but their power lies in the scale and the larger average size of their franchisees which is relative to their QSR peers enabling their system to manage the inflationary environment better compared to the competition.