Calabasas Hills, Calif. — The Cheesecake Factory Incorporated has entered into definitive agreements to acquire Fox Restaurant Concepts (FRC) and the remaining interest in North Italia, reinforcing its leadership position in experiential dining. The transactions will be completed for $308 million.
“Since making our initial minority investments in North Italia and Flower Child in 2016, we have not only helped fuel the growth of both brands, but also developed a deep relationship with Sam Fox at Fox Restaurant Concepts,” says David Overton, chairman and CEO of The Cheesecake Factory Incorporated. “We realized the true potential of this relationship as we worked through the integration process for our planned acquisition of North Italia. It became evident that the combination of two of the most experiential and entrepreneurial restaurant companies could drive greater value as one organization. In turn, we have decided to bring together North Italia and Fox Restaurant Concepts, including Flower Child, with The Cheesecake Factory to reinforce our leadership position in experiential dining.”
According to Sam Fox, founder and CEO of Fox Restaurant Concepts,“This partnership will be the first of its kind for the restaurant industry. David Overton and I quickly realized the magic occurring between our organizations while we worked through North Italia’s integration. With our aligned cultures and philosophies, The Cheesecake Factory is the right partner to embrace our creative spirit, enabling us to innovate concepts, while providing the infrastructure and capital to scale.”
The transactions will be completed for $308 million in cash at closing. An additional $45 million will be due ratably over the next 4 years. The company previously invested $88 million in the North Italia and Flower Child concepts over the last 3 years in anticipation of their purchase. The transactions do not require approval by the company’s shareholders.
Following the completion of the transactions, North Italia’s operations will be located at The Cheesecake Factory Incorporated’s corporate headquarters in Calabasas Hills, Calif., to help scale the concept nationally. Since the initial investment in 2016, the company has been working closely with North Italia’s operations and leadership team to construct a comprehensive integration plan. FRC will operate as a wholly-owned subsidiary, and continue to be led by Sam Fox, founder and CEO, from FRC’s headquarters in Phoenix.
North Italia turns a modern lens on Italian cooking in the upscale, casual-dining segment. All dishes are handmade from scratch daily. The concept currently has 20 locations in nine states and Washington D.C. At the close of the transaction, 21 locations are expected to be in operation. The Cheesecake Factory Incorporated plans for 20%-plus annual unit growth for the North Italia concept.
Fox Restaurant Concepts (FRC) was founded by Sam Fox, a 10-time James Beard Award semifinalist for Restaurateur of the Year. FRC currently operates 45 restaurants across seven states and Washington, D.C. For more information, visit www.foxrc.com.
The combined company is expected to be an experiential dining category leader with nearly $3 billion in pro forma 2020 revenues and anticipated 8%-plus revenue growth.
The transactions have been structured to diversify operations, capitalize on The Cheesecake Factory Incorporated’s scale and infrastructure, maximize cash flow generation and maintain the respective teams’ focus on their core businesses. The company also intends to capture supply chain, real estate and additional synergies over time.
The Cheesecake Factory Incorporated created the upscale, casual-dining segment in 1978 with the introduction of its namesake concept. The company, through its subsidiaries, owns and operates 219 restaurants throughout the United States, including Puerto Rico and Canada, comprised of 202 restaurants under The Cheesecake Factory® mark; 14 restaurants under the Grand Lux Cafe® mark; two restaurants under the RockSugar Southeast Asian Kitchen® mark and one restaurant under the Social Monk Asian Kitchen® mark. Internationally, 22 The Cheesecake Factory® restaurants operate under licensing agreements. For more information, visit www.thecheesecakefactory.com.
SOURCE: The Cheesecake Factory Incorporated