Brinker International Inc.
) is set to buy 11 of its franchised Chili's restaurants based in
Alberta, Canada from Speedy Creek Ltd., which has long been one
of its franchisees. The acquisition, which is expected to be
carried out by one of Brinker's operational arms, is slated to be
sealed by the end of Jun 2013.
As per the agreement, Gerry Inglis, who was previously engaged
in assisting Speedy Creek to manage Chili's restaurants, is now
appointed as the president of Brinker's operating unit in Canada.
Moreover, the company will continue to deploy Speedy Creek's
operational strategy to strengthen its brand's position in the
These 11 Alberta-based Chili's restaurants generated revenues
of nearly $35.0 million annually. We believe that the strong
growth prospects and solid revenues make these restaurants a
lucrative acquisition target. Post acquisition, both the sales
and the profit from these 11 acquired units will go to Brinker
rather than only the franchisee royalty fees.
In 1991, Brinker's Chili's restaurant stepped into Canada
through its first international franchise partner, Speedy Creek.
Over the past 20 years, Chili's restaurant with its lowest per
person average check and one of the highest average unit volumes
in the industry is growing rapidly in the Canadian market. With
its flexible price structure, the brand has become popular with
consumers, making it a solid value proposition. This acquisition
is expected to further boost the company's Canadian presence.
While most of the other restaurateurs such as
Yum! Brands Inc.
Domino's Pizza, Inc.
) are concentrating on the transition to a franchisee-based
model, this Zacks Rank #3 (Hold) company is shifting toward
company-owned operations. This transition affirms management's
confidence in its core business model.
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